n
href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
May 21, 2008
Movie Gallery Emerges from Bankruptcy
Protection
Movie Gallery Inc. said yesterday that it had concluded its chapter 11
restructuring and successfully emerged from bankruptcy protection,
Reuters reported. Movie Gallery, the second-largest North American video
rental company with about 3,300 stores, also said that it closed a $100
million exit financing facility and named a new seven-member board of
directors. Under the reorganization plan, Movie Gallery is issuing new
common stock and warrants, which will be distributed to certain classes
of unsecured creditors. Current shareholders are not eligible to get
distributions of new common stock or any other distributions.
href='http://www.reuters.com/articlePrint?articleId=USN2033350120080520'>Read
more.
Commentary: The Risks of Rescuing
Borrowers
Some industry experts warn that the government's housing plan to help
distressed homeowners refinance costly loans is riskier than disclosed
and that if home prices continue to decline for years, taxpayers could
be on the hook for billions, according to a New York Times
commentary today. Senators said the plan, which empowers the Federal
Housing Administration (FHA), to insure risky loans, would most likely
help hundreds of thousands of homeowners avoid foreclosure and stabilize
the housing market. Critics note that the government's estimates of the
housing plan's cost make relatively conservative assumptions about
default rates and housing price declines.
href='http://www.nytimes.com/2008/05/21/business/21fannie.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
Autos
Automakers Balk at Federal-Mogul
Injunction Bid
A group of claimants led by DaimlerChrysler Corp., Volkswagen of America
Inc. and Ford Motor Co. is seeking to stop the asbestos personal injury
trust created by Federal-Mogul Corp.'s reorganization plan, Bankruptcy
Law360 reported yesterday. The claimants on Friday protested the request
for injunctive relief on the grounds that such a restriction would cause
them irreparable harm if granted. Last month, the asbestos personal
injury trust sought an injunction against certain claimants in hopes of
salvaging the possibility that the court would adopt a settlement that
would flood the trust's coffers with $140 million.
href='http://bankruptcy.law360.com/secure/printview.aspx?id=56804'>Read
more. (Registration required.)
Plastech Seeks Bankruptcy Court Approval for
Sale
Bankrupt auto parts supplier Plastech Engineered Products Inc. is
seeking court approval to sell its businesses and said that it is in
talks to sell its interiors unit to Johnson Controls Inc., Reuters
reported yesterday. Plastech has asked the U.S. Bankruptcy Court in
Detroit to approve bidding rules and a proposed June 16 auction for its
four main businesses and other assets, according to a motion filed late
on Friday.The Dearborn, Mich.-based supplier filed for bankruptcy in
February with $488 million in debt in a bid to stop Chrysler from
seizing tools used to manufacture parts for the automaker. Plastech said
that it would accept bids until June 13 and may pick a lead bidder to
establish a floor for the auction. The lead bidder would be entitled to
a break-up fee of no more than 2.5 percent of the purchase
price.
href='http://www.reuters.com/article/bondsNews/idUSN2027702920080520'>Read
more.
Government Extends Its Power in
Student Lending
With scores of lenders unable to come up with money to provide
student loans, the Department of Education is preparing to exercise
broad new powers in the coming weeks that could fundamentally recast how
millions of students pay for college, the Washington Post
reported today. This initiative could transform the federal government
from a guarantor of student loans into the dominant provider, replacing
the outside lenders to whom students and their families have long
turned. Though the Education Department has been making a portion of
these federally backed loans, it is now aiming to dramatically expand
its role as a direct lender to fill the void created by an exodus of
private-sector lenders, due primarily to the credit crisis.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/20/AR2008052001912_pf.html'>Read
more.
Commentary: Inside the Selection
Meeting for Linens 'n Things
Tens of millions in fees are potentially at stake as creditors
of recently bankrupted retailer Linens 'n Things Inc. are deciding who
to pick as their financial and legal advisers, according to a feature in
yesterday's Wall Street Journal. Ten law firms and
advisory firms have made the trek to Wilmington, Del., but only four
will be asked to pitch to Linens' unsecured creditors and just two will
win. Representing the unsecured creditors is often a confrontational
role, one that requires providing a legal or financial check on what the
company does or proposes. In the case of Linens, the advisers will weigh
in on questions about the future of the retailer, such as how many
stores to close, whether it should be sold to another retailer or
whether to liquidate.
href='http://online.wsj.com/article_print/SB121123964050005363.html'>Read
more. (Registration required.)
W.R. Grace Asks to Keep Funding Retirement
Plans
Bankrupt chemical company W.R. Grace & Co. on Monday asked
a bankruptcy court to allow it to continue meeting the minimum funding
requirements of its defined benefit employee retirement savings plans,
which cover all of the company's U.S.-based employees, Bankruptcy
Law360 reported yesterday. The company points out that in
accordance with the court's orders in those instances, W.R. Grace
contributed $48.5 million to the plans in 2003, $20 million in 2004,
$24.1 million in 2005, $101.4 million in 2006, $76 million in 2007 and
$32.7 million to date in 2008. W.R. Grace further argued that the
continued funding of the plans was necessary in order to maintain the
morale of the company's work force and ensure the productivity and
profitability of the company.
href='http://bankruptcy.law360.com/Secure/printview.aspx?id=56792'>Read
more. (Registration required.)
Ceres Capital Creditors Object to Prepackaged
Plan
The newly formed unsecured creditors' committee in Ceres Capital
Partners LLC's bankruptcy case has objected to the company's disclosure
statement and prepackaged chapter 11 plan, asking the court to either
delay a confirmation hearing slated for May 22 or refuse to confirm the
plan, Bankruptcy Law360 reported yesterday. Ceres, which
specialized in structured investment vehicles, filed its prepackaged
plan on April 17 in the U.S. Bankruptcy Court for the Southern District
of New York. The committee said that it can't fulfill its duties under
the time constraints imposed by the debtor's demand for confirmation
later this week and needs at least three additional weeks to complete
discovery and investigate the debtor.
href='http://bankruptcy.law360.com/Secure/printview.aspx?id=56835'>Read
more. (Registration required.)
Actuaries Scrutinized on Pensions
href='http://bankruptcy.law360.com/Secure/printview.aspx?id=56835'>
href='http://bankruptcy.law360.com/Secure/printview.aspx?id=56835'>
/>
Criticism of actuarial consultant's practices related to public pension
schemes is rising as states and local governments realize they are
promising benefits to public workers on the basis of numbers that make
little economic sense, the New York Times reported today. There
is often subtle pressure on the actuary to come up with projections that
make the pension fund look good. Most of all, public pension actuaries
use old methods that have fallen far out of sync with the economic
mainstream. San Diego's official numbers produced by an outside
actuarial firm were found to be so misleading that the U.S. Securities
and Exchange Commission sanctioned the city for securities fraud. The
city sued the actuarial firm, which settled. The New York State
Legislature has dropped several proposed pension enhancements since
lawmakers learned that the actuary, whose opinion was that the cost of
the benefits would be zero, was being paid by a labor group.
href='http://www.nytimes.com/2008/05/21/business/21pension.html?ref=business&pagewanted=print'>Read
more.
Motorola Settles Iridium Bankruptcy
Cases
Motorola Inc. yesterday said that a judge approved a global settlement
of disputes in the Iridium bankruptcy cases pending in the U.S.
Bankruptcy Court for the Southern District of New York, Dow Jones
Newswires reported. The Schaumberg, Ill., telecommunications company
said that the approval of the settlement resolves in its favor, at no
out-of-pocket cost to the company, all pending claims against the
company arising from Iridium's bankruptcy proceedings.
href='http://money.cnn.com/news/newsfeeds/articles/djf500/200805201613DOWJONESDJONLINE000688_FORTUNE5.htm'>Read
more.
International
Tricom's U.S. Creditors Eye
Payout After Delays
Tricom SA, a Dominican Republic telecommunications provider whose
founder was convicted of bank fraud, is testing whether a foreign
company can reorganize in a U.S. bankruptcy court, even when it doesn't
have substantial business in the United States, Bloomberg News reported
yesterday. If the company succeeds, creditors -- including founder
Manuel Arturo Pellerano Pena -- might get as much as 80 cents on the
dollar on claims that last traded at 52 cents, said Arthur Byrnes,
chairman of New York-based Deltec Asset Management Corp., owner of $19
million in Tricom bonds. Shareholder payouts would top out at a 1
percent stake in the new $140 million company, based on pro
forma equity value.
href='http://www.bloomberg.com/apps/news?pid=20601086&sid=aXEXbI1yPbYM'>Read
more.