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October 20, 2005
id='1'>U.S.
Supreme Court Nominee Advocated Asbestos Fund
Earlier this year,
U.S. Supreme
Court nominee Harriet Miers argued for an asbestos compensation fund
favored
by leaders of the Senate committee that will soon hold her
confirmation hearing,
Reuters reported yesterday. In speeches on several occasions, Miers,
the White
House counsel, advocated legal reform policies championed by President
Bush,
including curbs to asbestos injury lawsuits. "We are grateful
that Senator
(Arlen) Specter has taken this (asbestos) issue up and is helping
negotiate
an effective bill," she said on April 5 in remarks to the
American Tort
Reform Association.
href='http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=URI:urn:newsml:reuters.com:20051019:MTFH52681_2005-10-19_21-59-44_N19575376:1'>Read
the full story.
id='2'>Trustee
Resigns from Pension Board Under Legal Cloud
John Torres says he
is resigning
as a member of the 13-member board that governs San Diego's pension
system,
NBCSanDiego.com reported yesterday. Torres and five other former
pension board
members have pleaded not guilty to felony conflict-of-interest charges
in May.
The suit focuses on a 2002 agreement that led to the underfunding of
the city's
pension system. Prosecutors say that Torres and the other officials
approved the
underfunding in exchange for increases in their own benefits. A
hearing is scheduled
for Oct. 26.
id='3'>Bankruptcies
to Shake Up Banking Industry
Bank of America
(BOA) expects
to see higher loan charge-offs in the fourth quarter as consumers
rushed to
file for bankruptcy ahead of the new bankruptcy legislation, CNN
reported yesterday.
The news came as the Charlotte, N.C.-based company reported that its
third-quarter
profit increased 10 percent as surging revenue from credit card fees,
investment
gains and trading offset an increase in bad loans. BOA's CFO Alvaro de
Molina
said that the company expects "meaningfully higher
charge-offs," but
declined to estimate just how much of a loss the company expects.
JPMorgan Chase said
that it expects a $500 million charge-off from the spike in
bankruptcies, while
Citigroup said on Monday that it sees a $310 million
bankruptcy-related loss
in the fourth quarter. Both companies said that the majority of those
bankruptcies
were likely accelerated to meet the deadline before the new bankruptcy
litigation
and that they expect to reap some benefit in 2006 from putting those
bankruptcies
behind them.
href='http://money.cnn.com/2005/10/19/news/fortune500/bankofamerica_earnings/index.htm'>Read
the full story.
id='4'>Bankruptcy
Filings Deluge Courts
About a half
million Americans
may have filed for bankruptcy protection last week, trying to beat the
Oct.
17 deadline when a new, more restrictive bankruptcy law took effect,
the Washington
Post reported today. The courts were so inundated with petitions
that thousands
have yet to be recorded, according to Lundquist Consulting Inc., a
California
financial research firm that reports on case information collected
daily from
the nation's bankruptcy courts. Lundquist said that there were 205,129
bankruptcy
filings as of late last week, nearly double the number posted the
previous week.
But the company said that it anticipated another 300,000 petitions to
be recorded
this week, reflecting the cases filed on Saturday and Sunday as well
as the
backlog of paper petitions that were submitted last week but not yet
posted.
That would make the total filings in the 10 days before the new
bankruptcy law
took effect about 500,000, or nearly a third of the total filed in all
of 2004.
Normally, about 30,000 cases are filed per week.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/10/19/AR2005101902253.html'>Read
more.
id='5'>Judge
Calls BAPCPA “Meat-Ax Approach”
BAPCPA is bad law,
said the
judge who oversees court cases for north Mississippi residents
overwhelmed by
debt, the Associated Press reported yesterday. “There could have
been
some reform to better the system, but this is a meat-ax approach
rather than
doing it in a studied way,” said U.S. Bankruptcy Judge David
Houston
of Aberdeen, Miss. Congress changed the “gem of our bankruptcy
system”
so much that there will be “a subculture of people that will owe
a
lot of
money and just move away,” Houston said. While Congress intended
to steer
more debtors to take the chapter 13 route, Houston said that the
reforms
could have
the opposite effect—meaning more debtors will run away from
creditors
who won't get the money due them.
href='http://www.picayuneitem.com/articles/2005/10/19/news/15reform.txt'>Read
more.
id='6'>GM
Not Considering Bankruptcy
General Motors
Corp. isn't
considering bankruptcy protection as a way to solve its financial
troubles the
automaker's chairman and CEO said, the Washington Post reported
today.
"As we look at the responsibilities we have to a broad range of
constituents,
as we look at what we need to do to make the business successful, as
we look
at our businesses around the world, we think there are significant
costs to
bankruptcy," GM CEO Rick Wagoner said yesterday. "We don't
think it's
a good option." Wagoner also said he and other top executives
will see
their compensation cut by 40 percent or more this year, deflecting
criticism
from UAW President Ron Gettelfinger and others that executives aren't
making
enough sacrifices.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/10/19/AR2005101901475.html'>Read
more.
id='7'>"Opt-out"
Plaintiffs Settle with WorldCom
Five New York City
public
pension funds that did not join in the $6.1 billion WorldCom
class-action settlement
have settled their own lawsuits for a total of $78.9 million, Reuters
reported
today. The pension funds lost more than $200 million on WorldCom stock
and bond
investments after the company filed for bankruptcy in 2002 after an
$11 billion
accounting fraud. About $130 million of that amount was directly
related to
the fraud, said Bruce Stanton, a senior attorney in the pensions
division at
the New York City Law Department, according to Reuters. The defendants
who agreed
to settle include Citigroup, JP Morgan Chase & Co., Bank of
America Corp.,
Deutsche Bank AG, ABN AMRO, and Lehman Brothers Holdings Inc., which
underwrote
WorldCom bonds.
id='8'>Law
Firm Gets Restraining Order in Mirant Case
The U.S. Bankruptcy
Court
for the Northern District of Texas has issued a temporary restraining
order
barring a law firm from soliciting votes against Mirant Corp.'s second
reorganization
plan, the Atlanta Business Chronicle reported yesterday. The
Atlanta-based
energy company said that the order requires the removal of statements
made through
Internet Web site and chat room postings. Mirant contended that the
statements
were misleading, inaccurate and incomplete.
Airlines
id='9'>American
Airlines Trims Losses
American Airlines
parent
company AMR Corp. reported yesterday that its quarterly loss narrowed
as cost
cuts helped to counter spiking fuel prices, but the results lagged
forecasts
and its shares fell, Reuters reported yesterday. Shares of AMR slumped
as much
as 5 percent at one point, leading a broader slump in airline stocks,
but recovered
and traded higher near the close of trading on the New York Stock
Exchange.
Looking forward, AMR said that it expected to post a
"significant" fourth-quarter
loss if fuel prices stay where they are.
href='http://money.cnn.com/2005/10/19/news/fortune500/american_airlines.reut/index.htm'>Read
more.
id='10'>Judge
Allows Northwest to Return Aircraft
A bankruptcy judge
allowed
Northwest Airlines today to dump more than 100 aircraft if the
bankrupt company
cannot renegotiate leases and debt payments on the planes, the
Detroit Free
Press reported yesterday. As part of its reorganization, Northwest
asked
to eliminate 108 planes that would be drains on the company if it
can't start
making lower payments on the aircraft. By eliminating planes in the
request
Judge Allan L. Gropper addressed yesterday, Northwest wants to
bring
its fleet size and mix of planes in line with what it can afford,
demand for
travel and plans to shrink its schedule, Northwest said in court
filings.
href='http://www.freep.com/news/latestnews/pm6795_20051019.htm'>Read
the full story.
id='11'>Delta
Pilots Will Try to Reach Giveback Deal
Pilots at Delta Air
Lines
said late yesterday that they would try to reach a deal on new
concessions to
defer an attempt by the bankrupt airline to terminate their contract
to save
money, Reuters reported yesterday. Leaders of the Air Line Pilots
Association
unit at the carrier have authorized their negotiators to seek an
interim agreement
with Delta management. The airline has proposed that pilots take pay
cuts and
extend a temporary program that allows some to fly past retirement.
However,
it has not ruled out trying to terminate their contract in court if no
agreement
is reached. Delta management told pilots yesterday that the carrier
expects
to lose $2.16 billion for 2005 because company-wide cost-cutting
measures have
been offset by high fuel prices. A statement from the union said that
Lee
Moak, the
unit's chairman, wants to "sustain viable careers for Delta
pilots with
a financially healthy company."
In other news, the U.S. Bankruptcy Court approved Delta Air Lines'
motion to
reject certain aircraft, engine, and propeller leases pursuant to
§365(a)
of the Code and satisfy the surrender and return provisions of
§1110, BankruptcyData.com
reported today. Several parties had objected to the motion.
id='12'>Allianz
Sees Additional $826 Million in Asbestos Claims
Allianz AG Holding
sees an
$826 million increase in its exposure to asbestos- and
environmental-related
claims at U.S. unit Fireman's Fund Insurance Co., Reuters reported
yesterday.
A regular external audit estimated the U.S. property and casualty
insurer's
exposure to such claims at the end of 2004 amounted to $826 million
more than
had been previously estimated. Allianz also said the higher expected
claims
won't affect 2005 earnings as it has accumulated sufficient reserves
to cover
them.
href='http://www.marketwatch.com/news/story.asp?guid=%7BBD07BE0A-F7F1-4E89-8808-1900A1203619%7D'>Read
more.
id='13'>Southern
Investors Plan Confirmed
The U.S. Bankruptcy
Court
confirmed Southern Investors Service Co.'s distribution plan,
BankruptcyData.com
reported today. The plan will become effective when all conditions
precedent
to its effectiveness, as set forth in §§15.1 and 15.2 of the
plan,
have been satisfied or waived.
id='14'>Insiders
Collected $1 Billion Before Refco Collapse
In the year before
Refco
sold shares to the public and then promptly made the fourth-largest
bankruptcy
filing in U.S. history, insiders at the firm received more than $1
billion in
cash, according to the firm's financial statements, the New York
Times
reported today. One insider, Robert Trosten, received $45 million when
he left
his post as CFO a year ago, according to testimony at an arbitration
hearing
earlier this year. A great deal of mystery still surrounds the
collapse of Refco,
but investors and customers who are facing losses in Refco's
bankruptcy will
certainly want to understand how insiders could drain $1.124 billion
from the
firm's coffers in the year or so leading up to its demise.
href='http://www.nytimes.com/2005/10/20/business/20refco.html?ex=1130472000&en=b5d7a20250a24904&ei=5040&partner=MOREOVERNEWS'>Read
the full story.