href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
March 25, 2009
size='3'>Alabama County Urged to File for
Bankruptcy
Two commissioners in
Jefferson County, Ala., are pressing the county to file for bankruptcy
court protection as the county grapples with about $4 billion in debt
related to a controversial series of bond transactions earlier in the
decade, the Wall Street
Journal reported today. The county, which
encompasses and surrounds Birmingham, Ala., and is home to about 660,000
residents, was one of the first casualties of the financial crisis as a
series of derivative contracts, known as interest-rate swaps, backfired
in late 2007. The bonds and related swaps were issued to finance water
and sewer system improvements that had been mandated by the federal
government. In a written statement, County Commissioners Jim Carns and
Bobby Humphryes suggested that Jefferson County could no longer bear the
burden of its financial obligations and urged the county to file for
chapter 9 protection.
href='http://online.wsj.com/article/SB123791042389326403.html'>Read
more. (Subscription required.)
House Panel to Mark Up
Credit Card Bill of Rights on April 1
The House Financial Services Committee is scheduled to
meet on April 1 to debate and possibly make changes to the “Credit
Cardholders Bill of Rights,” Reuters reported yesterday. The bill,
introduced by Rep. Carolyn Maloney (D-N.Y.) duplicates the bill the
House of Representatives passed last year with the exception of a
provision that would require the industry to implement reforms 90 days
after a bill passed by both houses of Congress is signed into law. The
Federal Reserve has given the industry until July 1, 2010, to implement
rules to fix what Fed Chairman Ben Bernanke has called unfair and
deceptive practices. Many consumer groups and lawmakers criticized the
Fed for giving card issuers too much time.
href='http://www.reuters.com/articlePrint?articleId=USN2328360520090323'>Read
more.
href='http://www.abiworld.org/AM/TemplateRedirect.cfm?template=/CM/ContentDisplay.cfm&ContentID=56559'>Click
here to read the text of H.R. 627.
In related news, the House Financial Services
Committee will hold a hearing today titled “Exploring the Balance
between Increased Credit Availability and Prudent Lending
Standards.” The hearing will take place at 10 a.m. ET in room 2128
of the Rayburn House Office Building.
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr030409.shtml'>Click
here to view the witnesses testifying at the hearing and a link
to view the live Webcast.
Analysis: Struggling Firms
Not Hesitant to Suggest Bankruptcy Option
The possibility or even the mere suggestion of
bankruptcy has long been one of a corporation's most closely guarded
secrets, but companies increasingly on the verge of a chapter 11 filing
are not afraid to disclose their situation, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. In the past two months several large,
multibillion-dollar companies have disclosed that bankruptcy is quite
likely, if not a certainty. Those pre-announcing or giving advance
warning include door maker Masonite International Inc., auto-parts
supplier Lear Corp., cable giant Charter Communications Inc. and
amusement-park company Six Flags Inc. Charter announced in early
February that it would eventually file for bankruptcy protection, but
still has yet to do so. The disclosure trend shows how the current
bankruptcy wave is different from recent periods of distress. Financing
for reorganizations is in short supply, which is forcing companies to
disclose their woes before they have a completed plan to restructure.
Others are using the disclosures more strategically, as leverage to
squeeze concessions from creditors.
href='http://online.wsj.com/article/SB123793871073232167.html'>Read
more. (Subscription required.)
Buyer Tax Credits
House Republican leaders plan to unveil a housing
package today that would increase the tax credits available for
homebuyers and would direct law enforcement to crack down on mortgage
fraud, the
size='3'>Washington Post reported. Under the
proposal, borrowers refinancing their mortgages would be eligible for
$5,000 to help cover closing costs or to reduce their principal balance.
The plan also revives a $15,000 homebuyer tax credit proposal that
Republicans pushed last year. This time, the proposal would require the
borrower to have at least a 5 percent down payment. Both programs would
expire in July 2010. Republicans have not attached a price tag to their
proposal and it is unclear whether they could gather enough support from
Democrats to move the measure ahead.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/03/24/AR2009032402940_pf.html'>Read
more.
PBGC to Take Over Propex
Pension Funds
The Pension Benefit Guaranty Corp. (PBGC) will take
over two underfunded pension plans covering about 3,300 workers and
retirees of bankrupt construction materials manufacturer Propex Inc.,
which is finalizing a sale of its assets,
face='Times






New
Roman'
size='3'>Bankruptcy Law360 reported yesterday.
In bidding procedures motions filed in February, Propex said it
“did not anticipate any prospective buyer desiring to assume the
debtors’ pension plan obligations,” adding that it was in
discussions on the matter with the PBGC. According to PBGC estimates,
the Propex Inc. Cash Balance Retirement Plan and the Propex Inc. Cash
Value Retirement Plan are about 67 percent funded, with combined assets
of $40.6 million and benefit liabilities of $61.0 million. The plans
were frozen in 2006 and 2005, respectively. The agency said that it
expects to cover $19.4 million of the $20.4 million total
shortfall.
href='http://bankruptcy.law360.com/articles/93179'>Read
more. (Subscription required.)
Commentary: Now for the
Car-Parts Bailout
President Barack Obama's automotive task force entered
the race to save Detroit last week with a $5 billion program to aid the
nation's auto-parts suppliers, on top of the $17.4 billion given last
December to General Motors and Chrysler, according to a commentary in
today’s
size='3'>Wall Street Journal. Task force
members understand that trying to save GM and Chrysler will be fruitless
without propping up the companies that make components -often for both
the foreign auto makers with factories in America as well as for the
Detroit companies themselves. The bigger issue, though, is that parts
suppliers are limping along with just half the revenue they were getting
two years ago. It won't help much to guarantee payment on parts that
aren't getting ordered, which explains why although auto-parts
executives rejoiced last week when they learned the task force was about
to make an announcement, they were underwhelmed when they actually saw
it. The parts suppliers had asked for $25 billion, including $15 billion
of direct assistance. However, it will be nearly impossible to save all
the component companies.
href='http://online.wsj.com/article/SB123793893072432221.html'>Read
more. (Subscription required.)
Bill Seeks to Rescue
Faltering Newspapers
With many U.S. newspapers struggling to survive, Sen.
Benjamin Cardin (D-Md.) introduced a bill to help them by allowing
newspaper companies to restructure as nonprofits with a variety of tax
breaks, Reuters reported yesterday. Cardin's Newspaper Revitalization
Act would allow newspapers to operate as nonprofits for educational
purposes under the U.S. tax code, giving them a similar status to public
broadcasting companies. Under this arrangement, newspapers would still
be free to report on all issues, including political campaigns, but they
would be prohibited from making political endorsements. Advertising and
subscription revenue would be tax exempt, and contributions to support
news coverage or operations could be tax deductible.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/03/24/AR2009032401715_pf.html'>Read
more.
Drive to Tax AIG Bonuses
Slows
Congress's drive to recoup bonuses at American
International Group Inc. is slowing significantly as passions on the
issue cool, the
size='3'>Wall Street Journal reported today.
The bonuses sparked an outpouring last week in the House, which voted
overwhelmingly to impose a 90 percent tax on many bonuses, not just at
AIG but at all institutions receiving significant financial-bailout
support. But the legislation now appears certain not to come up in the
Senate until after a two-week recess that begins April 3. It could be
put off altogether if the administration demonstrates a commitment to
reining in such payments in the future. President Obama plans to meet
Friday with about a dozen top bank executives to discuss administration
plans to shore up the financial sector.
href='http://online.wsj.com/article/SB123794222776332903.html'>Read
more. (Subscription required.)
Dial-A-Mattress
International Files for Chapter 11 to Avoid Liquidation
Less than a week after three creditors petitioned to
liquidate Dial-A-Mattress International Ltd., the mattress retailer has
responded by filing for chapter 11 protection and securing a contract of
sale from fellow mattress merchant Sleepy's,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Dial-A-Mattress and its primary retailer,
1-800-Mattress Corp., said in the filing that they had less than $50,000
in assets and liabilities and owed at least $12.6 million to their
creditors, according to court documents. As part of the chapter 11
filing, Sleepy's offered to purchase a portion of the struggling
retailer's assets and will provide debtor-in-possession financing. On
March 17, three creditors filed a chapter 7 involuntary bankruptcy
petition against Dial-A-Mattress, seeking to recover $1.65 million in
outstanding debts. They included Sealy Inc., Blue Bell Mattress Co.
(also known as King Koil Northeast and Comfort Solutions) and 6225
Jericho Turnpike LLC. The cases are In re
1-800 Mattress Corp. and
face='Times New


Roman'>
face='Times New Roman' size='3'>In re Dial-A-Mattress Intl.
Ltd., case numbers 1-09-42201 and 1-09-42203,
in the U.S. Bankruptcy Court for the Eastern District of New
York. Read
more. (Subscription required.)
for Chapter 11
Oil and gas producer Transmeridian Exploration Inc.
has filed for chapter 11 protection, citing its landlord's demand that
it pay more than $600,000 in back rent and other costs,
face='Times New Roman'>
size='3'>Bankruptcy Law360 reported yesterday.
The Houston-based company and two wholly owned subsidiaries,
Transmeridian Exploration Inc./BVI and Bramex Management Inc., filed
their voluntary petitions Friday in the U.S. Bankruptcy Court for the
Southern District of Texas, citing assets of approximately $378 million
and liabilities of $452 million. The case is
face='Times New Roman'>In re
Transmeridian Exploration Inc., case number:
09-31859, in the U.S. Bankruptcy Court for
the Southern District of Texas.
href='http://bankruptcy.law360.com/articles/93297'>Read
more. (Subscription required.)
International
Click here to review
today's global insolvency news from the GLOBAL INSOLvency site.