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November 7, 2002
Lott Advances Priorities for Lame Duck, Next Congress
Newly empowered Republicans plan to press Senate Democrats for a speedy
post-election, lame-duck session that could wrap up by the end of next
week, Republicans said after winning control of both chambers of
Congress, CongressDaily reported. 'There are some things that we
should do and can do, but let's not drag it out,' said Senate Minority
Leader Trent Lott (R-Miss.), who is expected to become majority leader
in the 108th Congress. The lame-duck session is scheduled to begin next
Tuesday, with Democrats in control. But Republicans could take control
of the special session as soon as Missouri's secretary of state
certifies Sen.-elect Jim Talent (R-Mo.) or if Minnesota officials decide
to seat Sen.-elect Norm Coleman, a Republican, to fill the remainder of
the term of the late Sen. Paul Wellstone.
Dow Jones reported that Congress still has a lot of unfinished
business it could address during the lame-duck session. For instance,
very little work has been completed on fiscal 2003 spending bills. And,
numerous bills -- from bankruptcy to energy to homeland security issues
-- are also languishing near completion. Republicans, who definitely
will control the shots next year, aren't interested in doing much in the
lame-duck session. 'I hope it will be and expect it will be a relatively
short lame-duck,' Lott said. Lott, speaking about next year, said the
new GOP Senate will turn quickly to issues impacting the U.S. economy.
He said leaders may press for new tax cuts and will try to make Bush's
2001 tax cut package permanent. Issues Lott would like to get off his
plate before the new Senate session include bankruptcy reform and
terrorism insurance legislation. Both have been mired in gridlock --
largely due to House dynamics -- and face long odds on passage this
year.
Fed Cuts Rates By a Half Point
The Federal Reserve, worried about the sputtering economy, cut a key
interest rate by a half-point on Wednesday, marking its first rate
reduction this year, the Associated Press reported. After a closed-door
meeting, the Federal Open Market Committee voted 12-0 to lower its
target for the federal funds rate to 1.25 percent. 'Today's additional
monetary easing should prove helpful as the economy works its way
through this current soft spot,' the Fed said in a statement. The rate
cut had been widely expected, but many analysts believed it would be
only a smaller quarter-point move. In its statement, the central bank
emphasized concerns about the economic recovery amid rising worries
about how a possible war with Iraq would affect consumer and business
confidence. 'Incoming economic data have tended to confirm that greater
uncertainty, in part attributable to heightened geopolitical risks, is
currently inhibiting spending, production and employment,' the Fed said.
Some private economists question whether Wednesday's rate cut will have
the desired impact given the Fed has kept borrowing costs at very low
levels all year long. But other analysts believe the rate reduction will
at least bolster consumer and business confidence as well as help lift
spirits on Wall Street.
Rate Cut No Balm for Debt-laden Consumers
For all too many Americans struggling to dig out from debt, Wednesday's
surprisingly big cut in interest rates by the Federal Reserve may help
very little, Reuters reported. Personal bankruptcy rates are rising, job
growth has stalled and consumer debt is at an all-time high. So it's
unclear -- even after the Fed cut rates by an aggressive one-half
percentage point -- whether the tapped-out consumers can do much more to
keep the economy humming. 'More and more Americans are living life
styles they can't afford using borrowed money,' said Steve Rhode,
president of Myvesta, a financial crisis center in Rockville, Maryland.
'It's not just credit cards -- it's homes too big for them to afford,
cars too big for them to afford.' Said G. Ray Warner, resident
scholar at the American Bankruptcy Institute, 'We may actually be
hitting the point where the average American consumer doesn't want to
acquire more credit regardless of rates.' U.S. consumers were on the
hook for $1.73 trillion in credit card bills, auto loans and other loans
excluding mortgages through the end of August, according to the Federal
Reserve, up from $1.67 trillion at the end of last year and $1.56
trillion at the end of 2000. To read the full article, point your
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National Airlines Goes Out of Business after Financing Fails
National Airlines, a closely held carrier with 1,500 employees, said
yesterday it will cease operations, after a previously announced
financing agreement couldn't be completed, Bloomberg News reported. The
company failed to get financing needed to stay in business, Chief
Executive Officer Michael Conway said in a statement distributed by
Business Wire. Customers with tickets on the airline must seek refunds
through the credit card companies with which they bought tickets,
National said. In September, the Las Vegas, Nev.-based airline said that
it reached an agreement on a $112 million financing package that would
help it emerge from bankruptcy protection. National, which operates
flights between Las Vegas and Chicago and New York among other cities,
filed for bankruptcy in December 2000. In August, a U.S. board rejected
a request by National for a $50.5 million loan guarantee, saying the
carrier might not be able to repay the funds.
WORLDCOM
S.E.C. Files New Charges on WorldCom
The Securities and Exchange Commission filed additional fraud charges
against Worldcom on Tuesday, saying that the company inflated earnings
by almost $2 billion more than it had previously disclosed in accounting
manipulations that began in 1999, the New York Times reported.
WorldCom, which is in discussions with the S.E.C. to settle the case,
said that it expected to make more financial restatements as a result of
the discovery of additional accounting problems. The S.E.C learned about
the problems from the company. WorldCom, which is now operating under
bankruptcy protection, had previously disclosed $7.2 billion in
financial misstatements. The new disclosure brings the total amount to
more than $9 billion.
WorldCom Inc.'s admission that its financial misstatements may total
more than
$9 billion won't hinder the company's plans to reorganize and emerge
from bankruptcy, WorldCom's chief restructuring officer said, Bloomberg
News reported. 'Restatements have no bearing on where the business is
today and no bearing on the company's cash flow,'' said Greg Rayburn,
who was hired by WorldCom to help lead the company through its chapter
11 filing. 'Members of the creditors' committee ignore the restatement
issues as much as I do. They're historical.''
WorldCom Former CFO Sullivan Wants Case Dismissed
Former WorldCom Chief Financial Officer Scott D. Sullivan asked a
federal judge to
dismiss six counts of his indictment for securities fraud or to move his
trial on those counts out of New York, Bloomberg News reported. Sullivan
made the request in court papers filed with U.S. District Judge Barbara
S. Jones, who is in charge of his case. Last month Sullivan's lawyer
told the judge in a letter that the Washington, D.C.-based home of
WorldCom's MCI Communications Corp. unit, would better suit his
case.
Separately, Judge Jones yesterday denied Sullivan's request that she
step down from the case because of an alleged conflict of interest. The
judge, a former federal prosecutor, owns stock in WorldCom competitors
AT&T Corp. and Verizon Communications, according to her financial
disclosure reports. U.S. Attorney David Anders, who is prosecuting the
case, said he had not seen the motion. The government will respond by
Nov. 18, he said.
SpectraSite to Seek Bankruptcy Under Agreement with
Bondholders
SpectraSite Holdings Inc., a builder and operator of
wireless-communications towers, said it will file for bankruptcy under
an agreement with bondholders to restructure more than $2 billion of
debt, Bloomberg News reported. The company said it will cut its interest
expense by about $200 million a year under an agreement reached with
about two thirds of its senior bondholders. SpectraSite has agreed to
file a chapter 11 reorganization plan by Nov. 15. Cary, N.C.-based
SpectraSite reported a loss of $580.1 million on sales of $225.9 million
in the first half of 2002, compared with a loss of $250.9 million on
sales of $219.2 million in the year-earlier period. The company would be
the second major wireless tower operator to file for bankruptcy this
year. Sarasota, Fla.-based Pinnacle Holdings Inc., which rents tower
space to wireless communications companies, sought chapter 11 protection
in May amid the wireless industry's slump. SpectraSite said it would
continue to meet interest payments under a $1.1 billion loan while in
bankruptcy.
UNITED AIRLINES
UAL's United Pilots Urge State Street to Halt Stock Sale
The leader of the union representing UAL Corp.'s United Airlines pilots
has urged State Street Corp.'s State Street Bank and Trust to stop
selling shares owned by the employees and begin buying back their stake,
Dow Jones reported. In a letter to State Street, which manages UAL's
employee stock ownership plan, Paul Whiteford, chairman of the governing
body of the United branch of the Air Line Pilots Association, called the
bank's recent move to sell up to 11 million of the 59 million UAL shares
held for the workers 'shortsighted and irresponsible.' The pilots' move
to block the sale of their ownership stake comes as UAL shares stage a
strong rebound amid optimism that financially troubled United, the
world's second-largest carrier, might be able to restructure outside of
bankruptcy court. Fueling such optimism, the union, representing 8,800
active United pilots, last week tentatively agreed to $2.2 billion in
labor savings over 5 1/2 years. UAL employees own 55 percent of the
company and hold three board seats. United pilots own 25 percent of the
UAL stock, and Whiteford sits on the UAL board.
U.S. Airline Loan Panel Releases Letter Seeking More UAL
Data
The federal panel administering an airline loan-guarantee program on
Wednesday took the unusual step of making public a letter asking UAL
Corp.'s United Airlines for additional information so the panel can
determine whether the carrier qualifies for $1.8 billion in loan
backing, the Wall Street Journal reported. In Chicago, a United
spokesman said the request for additional information 'is normal
procedure for the Air Transportation Stabilization Board' and was
expected after board staffers told United officials at a meeting on
Tuesday that they would be asking for further details. 'From United's
point of view, the meeting went well and we had a thorough and open
dialogue,' the spokesman said, adding that another meeting already has
been scheduled. United hopes to use the government aid to raise $2
billion in fresh capital, funding it needs if it is to avoid filing for
protection from its creditors in bankruptcy court later this year. To
bolster its original application, filed in June, United last month
brought to the board a revised business plan containing steeper cost
cuts and additional revenue enhancements. The loan board will only
extend the assistance if it believes the business plan is viable and the
airline will be able to repay the loan.
US Airways Says Objections to New DIP Loan Resolved
U.S. Airways Group Inc. said it believes it has resolved the only two
objections to its new debtor-in-possession loan, subject to final review
by the parties, according to a letter filed Tuesday with the court
handling its chapter 11 bankruptcy case, Dow Jones reported. A hearing
on final approval of the loan is scheduled for Thursday morning before
Judge Stephen S. Mitchell of the U.S. Bankruptcy Court in
Alexandria, Va. Judge Mitchell is also scheduled to take up several
additional matters, including a number of agreements with parties
holding interests in the company's aircraft and aircraft-related
equipment.
Objections to the airline's new $500 million DIP loan with the
Retirement System of Alabama were filed by Massachusetts Port Authority
and a group led by Goodrich Corp. Commercial Wheels and Brakes Division.
The Retirement System, one of US Airways' top creditors, has agreed to
invest $240 million in exchange for an equity stake in the reorganized
airline. The proposal is subject to higher offers. The due diligence
period for other offers ends on Monday. US Airways won interim court
approval in late September to use up to $300 million of the loan pending
Thursday's hearing. The company has said it hopes to present a plan of
reorganization by the end of the year and emerge from chapter 11
protection in early 2003.
Optimism in Retail Power Markets Persists, as Do Losses
Despite plenty of evidence to the contrary, a handful of electricity
companies are confident they can make money by luring large numbers of
customers away from their local utilities, Dow Jones reported. The
number of suppliers competing to provide power to homes and businesses
has shrunk over the past several years amid complaints that states'
regulatory policies have made it impossible to turn a profit. The
businesses that remain are operating at a loss. Meanwhile, the West's
energy crisis and Enron Corp.'s meltdown have convinced a number of
states to postpone plans to open up their electricity markets, and
others are reporting that their experiments with deregulation are making
less progress than expected. But stalwarts say that with patience and
sound business models, companies can ultimately prosper in the $230
billion U.S. retail electricity market. 'You need a little patient money
to get through the investment and learning phase,' said Bruce Humphrey,
vice president of Xenergy Inc., an independent energy consulting firm in
Burlington, Mass. 'Once we get through this rocky transition, I think
there are opportunities where a large number of companies can be
successful. Even companies driven out of some markets by such
difficulties remain upbeat about the sector's potential. NewPower
Holdings Inc., which was launched by Enron and filed for bankruptcy
protection in June, said that competitive power suppliers can succeed
despite its Enron-related collapse.
U.S. Utilities Face Tough Debt Refinance Path
The U.S. utilities sector, hit by poor industry fundamentals and lack of
easy access to capital, will find it difficult to refinance over $90
billion in medium-term debt that matures in four years, Reuters
reported. A bulk of the money was borrowed from banks since 1997 to
build new power plants and much of that matures between 2003 and
2006.
'As the leading players in this market sector struggle, the ability to
refinance maturities will be one of the keys to their survival,' said
S&P credit analyst Arleen Spangler. S&P compiled data on 23
power companies, 15 of them owning both regulated and unregulated
assets, with the rest owning unregulated assets. S&P says that
exposure to the energy sector could pose the next wave of problems of
the banks. Recently, some banks have either been cutting their exposure
to the energy sector or asking for more assets to be put up as
collateral. 'In some cases, in which banks have deemed the unencumbered
assets insufficient, banks may refuse to provide additional financing
and force companies into default or to file for bankruptcy,' S&P
said. The U.S. utilities sector's bad run kicked off almost immediately
after energy trader Enron Corp. fell into bankruptcy last year and
unleased a barrage of bad news hitting energy traders. False trades,
profit warnings, declines in volumes of energy trades and sharp falls in
share prices have hit a number of utilities.
ENRON
J.P. Morgan Loses Second Bid to Force Enron Payments
J.P. Morgan Chase & Co. lost its second effort to force 11 insurance
companies to cover the bank's $965 million loss on gas and oil
transactions with Enron Corp, Bloomberg News reported. The insurers
guaranteed trades between a J.P. Morgan entity, Mahonia Ltd., and Enron.
The insurers wouldn't pay after Enron defaulted, calling the deals shams
designed to hide loans to Enron. In March, the second-largest U.S. bank
lost its first bid for a court order to force payment. J.P. Morgan
renewed the request, and U.S. District Judge Jed Rakoff rejected it
again yesterday. 'The bottom line is that, taking the disputed facts
most favorably to the defendants, a reasonable juror could, if he or she
wished, find by clear and convincing evidence the fraud alleged,''
Rakoff said. Rakoff also said the insurers can claim only fraud by J.P.
Morgan as a defense against payment. The trial is scheduled for Dec.
2.
Fastow Pleads Not Guilty to 78-Count Indictment
Former Enron Corp. chief financial officer Andrew Fastow pleaded not
guilty on Wednesday to a 78-count federal indictment charging him with
masterminding complex financial schemes that enriched him and helped
doom the energy trading powerhouse, the Associated Press reported. 'Your
honor, in answer to each of the charges, I am not guilty,' Mr. Fastow
said to U.S. Magistrate Judge Marcia Crone during a five-minute hearing.
Mr. Fastow, ousted a year ago as Enron spiraled toward bankruptcy, was
initially charged Oct. 2 and indicted on Halloween on various counts of
fraud, money laundering, conspiracy, obstruction of justice and other
charges. He entered his plea on Wednesday afternoon in federal court in
Houston.
HQ Global Wants More Time to File Reorganization Plan
HQ Global Holdings Inc. is seeking approval from a bankruptcy court to
extend the company's exclusive right to file a reorganization plan and
lobby creditors for support, Dow Jones reported. Court papers said the
company wants up to Jan. 13 to file a plan and until March 31 to lobby
creditors for support. A hearing on the issue is scheduled for Nov. 18
in the U.S. Bankruptcy Court in Wilmington, Del. If the court turns down
the company's request, its exclusive right to file a plan would end on
Nov. 13, and its exclusive solicitation period would end on Jan. 13. The
company said that since bankruptcy proceedings began, it has analyzed
the profitability of its office centers and negotiated a number of
transactions that will significantly reduce expenditures needed to run
the business. Court papers said HQ Global negotiated an agreement with
AT&T Corp. that will reduce its telecommunications costs by more
than $1 million a year. The company also struck an agreement with Sprint
Corp. that will yield annual savings of $500,000 a year. HQ Holdings
also said it has stabilized and reinforced relationships with customers,
landlords and suppliers. The company is working closely with its pre-
and post-petition lenders to create a consensual plan of
reorganization.
KMART
Kmart Probes Employee Travel, Expense Records
As Kmart Corp. investigates the circumstances that led it to file for
bankruptcy court protection, the discount chain is examining its
employees' travel records and relocation expenses, the Associated Press
reported. Kmart has subpoenaed an undisclosed number of its former
employees, searching for information about the possible wrongdoing of
its previous management. Kmart has been secretive in recent months about
the progress of its stewardship review, but a U.S. Bankruptcy Court
filing by former Kmart division President William Wulfers last week
revealed some details, the Detroit Free Press and the Detroit News
reported in Wednesday's editions. The FBI and U.S. Securities and
Exchange Commission are investigating any possible criminal wrongdoing
at Kmart.
Kmart Unit Pleads Guilty to Mail Fraud In Puerto
Rico
Kmart Corp. unit S.F.P.R. Inc. has pleaded guilty to one count of mail
fraud in the U.S. District Court in Puerto Rico and agreed to pay a $2
million fine in connection with damage claims related to a 1998
hurricane, Dow Jones reported. Kmart said that on Oct. 28 it and the
unit entered into a plea agreement with the United States, under which
the unit pleaded guilty to a one-count 'information' charging it with
mail fraud under Title 18 of the U.S. Code. The court sentenced the unit
and recommended a fine of $2 million, plus a three-year probation,
according to court papers. Subject to bankruptcy court approval, Kmart
agreed to transfer the funds to the unit and guarantee payment of the
fine, according to court papers. Kmart has been operating under chapter
11 since January.
Shares in Firms Facing Asbestos Suits Rise on Election
Shares in companies facing asbestos-related liabilities jumped on
Wednesday after Republicans won control of the U.S. Congress, raising
hopes that legislation would pass reigning in an explosion in asbestos
lawsuits against corporations, Reuters reported. An avalanche of
asbestos personal injury claims has cost more than $54 billion in
settlements so far and driven more than 60 U.S. companies into
bankruptcy. Asbestos litigation could cost U.S. companies more than $200
billion, several research firms have estimated. 'Clearly, investors are
betting on asbestos-related tort reform and this is driving up share
prices,' said David Kerans, an analyst at Argus Research. But Kerans
said the stock moves may be an overaction as he is skeptical that the
Republicans will put much political muscle behind asbestos tort reform.
U.S. Chamber of Commerce Executive Vice President Bruce Josten said he
is hopeful on the tort reform front. 'Asbestos reform, I think, is
increasingly a nonpartisan issue. You've got organized labor and some
elements of the trial bar joining with the business community,' he
said.
Supreme Court Hears Asbestos Exposure Arguments
The Supreme Court heard arguments yesterday in a case that the
petitioner argued is 'emblematic' of the 'crisis' in an asbestos
litigation regime that rewards individuals with little or no physical
impairment, CongressDaily reported. The Supreme Court is
reviewing Norfolk & Western Railway Co. vs. Ayers, in which a West
Virginia state court jury awarded $5.8 million to six retired railroad
workers who alleged that they were entitled to emotional distress
damages because they fear their exposure to asbestos at the railroad and
elsewhere may cause them to develop cancer. Justices Stephen Breyer,
John Paul Stevens, Ruth Bader Ginsburg, Sandra Day O'Connor and David
Souter were especially vigorous in their questioning of both sides.
The court's ruling could prove pivotal for pending federal
legislation that would require individuals to wait until they are
manifestly ill before being able to sue for compensation. The workers in
the Ayers case established that they had been substantially exposed to
asbestos during work for the railroad and are now suffering asbestosis
as a result. While the Federal Employer's Liability Act gives injured
employees of railroads the right to recover for work-related injuries,
Carter Phillips, attorney for the railway, argued that the plaintiffs
are not entitled also to the recovery of mental anguish damages related
to a fear of developing cancer. To award damages on a fear of developing
cancer would say to plaintiffs, 'The sky's the limit,' Phillips
said.
Supra Ordered to Pay $7.5 Million; Judge Sets Monthly Fee to go to
BellSouth
A federal bankruptcy judge on Tuesday ruled that Supra Telecom must pay
BellSouth Corp. $7.5 million a month for continued use of its network
during its chapter 11 bankruptcy proceedings, the Sun Sentinel
reported. The Florida reseller must make a payment of $3.5 million on
Nov. 7 and pay every Thursday afterward. If Supra fails to make any of
the payments, BellSouth can begin disconnecting Supra customers without
giving notice to Supra, Judge Robert Mark warned. However,
BellSouth would still give notice to Supra customers according to the
plan approved by the Florida Public Service Commission. The judge did
not require an advance deposit, but told Supra the company would have to
'pay as you go' or termination would be the result, according to
BellSouth spokesman Spero Canton. The Atlanta, Ga.-based telecom giant
threatened to cut off customers several weeks ago when the reseller
defaulted on most of its $18 million August payment. Supra filed for
chapter 11 bankruptcy protection on Oct. 25.
Adelphia Sues Deloitte & Touche, Company's Former
Auditors
Adelphia Communications Corp., the sixth-largest U.S. cable television
operator, said it sued Deloitte & Touche LLP, its former auditors,
Bloomberg News reported. Adelphia filed for bankruptcy protection in
June. Deloitte 'knew or should have known'' that founder John Rigas, two
of his sons and two others hid $2.3 billion in debt and looted the
company for personal expenses, as U.S. prosecutors and regulators
allege, the negligence suit claims. 'As a direct result of Deloitte's
own wrongful conduct, Adelphia has suffered very large damages and was
ultimately forced to file for bankruptcy protection,'' the company said
in the suit, filed in state court in Philadelphia. Adelphia, which has
been sued with the Rigases by the U.S. Securities and Exchange
Commission for fraud, seeks unspecified compensatory and punitive
damages from Deloitte. Adelphia accused
Deloitte of professional negligence, breach of contract, fraud and
aiding and abetting a breach of fiduciary duty.
Global Crossing Deal Is Facing Stiff Review in Post-9/11
World
Telecommunications-service provider Global Crossing Ltd. is undergoing a
tough federal review of the $250 million deal that will give majority
control of its assets to a Hong Kong conglomerate and a company
controlled by the Singapore government, the Wall Street Journal
reported. The U.S. Defense and Justice departments and the U.S. Federal
Bureau of Investigation are examining how the transaction will affect
national security, law enforcement and public-safety issues, according
to an Oct. 21 filing with the U.S. Federal Communications Commission.
The agencies asked the FCC for more time to conduct their assessments.
Madison, N.J.-based Global Crossing filed for chapter 11 bankruptcy
protection in January, and in August, Singapore Technologies Telemedia
Pte. Ltd. and Hutchison Whampoa Ltd. received 61.5 percent of the
company for $250 million in cash. Global Crossing carries traffic for
several U.S. governmental agencies over its 100,000-mile fiber-optic
network. People involved with the transaction say they expect that after
concessions, the deal ultimately will win approval from both the FCC and
the Committee on Foreign Investment in the United States, a multi-agency
panel led by the Treasury Department.
Cargill Fertilizer Unit to Buy Florida's Farmland Hydro
Cargill Inc. said on Wednesday that a federal bankruptcy court has
cleared the way for its Cargill Fertilizer subsidiary to buy the assets
of Farmland Hydro L.P. of Bartow, Fla., the Associated Press reported.
Cargill said it would assume complete operations of Farmland Hydro's
Green Bay fertilizer plant near Bartow, and expects to retain about 270
of the company's 290 employees. Cargill, based in Minnetonka, Minn.,
also is acquiring about 15,000 acres of Farmland Hydro land that is
being permitted for a phosphate mine operation. Terms of the sale
weren't disclosed. Farmland Hydro is a limited partnership owned equally
by Hydro Agri North America Inc. and Farmland Industries Inc. Farmland
Industries filed a chapter 11 bankruptcy petition in Kansas City, Mo.,
on May 31.
Judge Wants Financial Projections for Budget Group Sale
A bankruptcy judge on Wednesday directed Budget Group Inc. and its
prospective purchaser to share historical and financial projections in
order to assure creditors that the purchasing entity will be able to
meet its financial obligations, Dow Jones reported. Cherokee Acquisition
Corp., the entity that was created by Cendant Corp. to purchase
substantially all of Budget Group's assets in a deal valued at $506.8
million, will present the information when a hearing to consider
approval of the sale reconvenes on Thursday morning. Roughly 170
objections to the sale were filed with the court --19 of which said
Budget Group and the purchaser didn't demonstrate adequate assurance of
future performance, according to court documents.
Budget Group and Cherokee had hoped the testimony of a Cendant
executive working on the deal would be enough to convince Judge Mary F.
Walrath of the U.S. Bankruptcy Court in Wilmington that Cherokee would
be able to meet its financial obligations. However, beyond Senior Vice
President David Blaskey's testimony that Cendant will provide a $200
million, two-year working capital line, the parties failed to meet that
burden. Budget Group asked that the court take into consideration
Cendant's financial prowess -- including its $12 billion to $13 billion
market cap -- but objectors said the court should limit its scope to
viewing Cherokee, the purchasing entity. Judge Walrath agreed. At
Wednesday's hearing, Budget Group resolved roughly 94 objections with
entities that said they are owed more money than Budget Group is willing
to pay them. The debtor company reached deals with the objectors to
address the disputes after the sale is approved by the court.
Also on Wednesday, Judge Walrath continued a hearing to consider a
motion by Ryder System Inc. to lift the automatic stay so it can proceed
with a trademark lawsuit against Budget Group. Judge Walrath had ruled
that the stay won't be lifted until a sale deal is completed. However,
the sale is taking longer than Ryder System expected. The hearing will
reconvene Friday at 11 a.m. EST. Budget Group operates Ryder System's
former consumer-oriented yellow truck rental division. Ryder System is
asking the court to lift the automatic stay so it could force Budget
Group to litigate the issue in a Manhattan court. Budget Group filed for
chapter 11 bankruptcy protection in July, listing $4.05 billion in
assets and $4.33 billion in liabilities. The debtor is the nation's
third-largest car and truck rental company.
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