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May 19, 2008
Mortgage Lending
Mortgage Lenders Network Looks for
Extension to Negotiate Reorganization Plan
Mortgage Lenders Network USA Inc. says its needs more time to negotiate
a chapter 11 plan so it can work out a deal with its largest secured
creditor, GMAC's Residential Funding Co., the Associated Press reported
on Friday. Key meetings are scheduled for the coming weeks that may set
the stage for a chapter 11 plan settlement among creditors, lawyers for
Mortgage Lenders said in court papers filed Thursday. Mortgage
Lenders is asking for an extension until Oct. 6 to solicit creditor
support for its chapter 11 plan.
href='http://www.forbes.com/feeds/ap/2008/05/16/ap5020726.html'>Read
more.
Commentary: Preparing for the Next
Mortgage Bust
The government needs to act quickly to reverse the spiraling housing
downturn, which is now feeding on itself as price declines are provoking
foreclosures, which are in turn provoking more price declines, according
to a New York Times editorial today. Congress has yet to
produce a bill to aid borrowers at risk of foreclosure. The House has
already passed a bill to provide homeowners with relief, but the Bush
administration has threatened to veto the package. Meanwhile, the Senate
Banking Committee is still negotiating the terms of its companion
legislation. If house prices fall more than expected - a peak-to-trough
decline of 20 percent to 25 percent is the rough consensus, with the low
point in mid-2009 - financial losses and economic pain could extend well
into 2011. That is because a category of risky adjustable-rate loans is
scheduled to reset to higher payments starting in 2009, with losses
mounting into 2010 and 2011 and the turmoil in the financial system will
href='http://www.nytimes.com/2008/05/19/opinion/19mon1.html?_r=1&oref=slogin&ref=opinion&pagewanted=print'>Read
more.
Autos
Delphi Asks Court to Force
Investors to Pay $2.6 Billion
Auto parts supplier Delphi Corp on Friday filed a lawsuit against an
investor group led by Appaloosa Management L.P in an attempt to win a
court order requiring the group to provide $2.55 billion in equity or
damages to the bankrupt company, Reuters reported. Last month, an
investor group led by Appaloosa backed out of a $2.55-billion equity
commitment to Delphi that had been intended to support the company's
emergence from bankruptcy. The Troy, Mich.-based supplier asked for the
court to order the investor group, including an affiliate of Merrill
Lynch, Goldman Sachs & Co and UBS Securities LLC, to provide up to
$2.55 billion in funding or to clear the way for it to seek damages at
trial for breach of contract and fraud.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/16/AR2008051603003.html'>Read
more.
Judge Asks Dura to Clarify Trade Secret
Claims
U.S. District Judge Mona Majzoub on Wednesday ordered Dura Automotive
Systems Inc. to clarify to the court which trade secrets it is accusing
Magna Donnelly Corp. of misappropriating, Bankruptcy Law360
reported on Friday. Judge Majzoub's ruling was in response to a motion
by Magna Donnelly complaining that Dura's court filings did not list the
secrets at issue with “reasonable particularity” as required
by the court. She ordered Dura to create an actual list of the trade
secrets at issue, even if that list would be composed of thousands of
secrets, as Dura has claimed.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=56472'>Read
more. (Registration required.)
Tentative Agreement May End Strike
That Disrupted Production at 32 GM Plants
The auto industry's longest strike in more than 40 years, a walkout at
parts supplier American Axle that disrupted production at 32 General
Motors plants, will end within days if the picketing workers ratify a
tentative agreement reached late Friday, the New York Times
reported yesterday. Negotiators from the United Automobile Workers union
and American Axle reached the deal on the 81st day of the strike, which
began Feb. 26 when about 3,650 workers at five factories in Michigan and
New York walked off the job. It is expected that the agreement will call
for closing two or three plants, offering buyouts worth as much as
$140,000, and drastically reducing the wages and benefits of workers who
remain with the company, in exchange for a $5,000 signing bonus for all
workers.
href='http://www.nytimes.com/2008/05/18/business/18auto.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
Fuel Costs May Thrust Airlines into
Bankruptcy
Just months after reporting their highest annual profits in eight years,
U.S. airlines are in a nose dive that could leave some major carriers in
bankruptcy, the Chicago Tribune reported today. Leaders at
United Airlines and across the industry are scrambling to devise
business models that will hold up to the stresses of $128 per barrel
crude oil and a sluggish economy. If the 10 largest U.S. airlines don't
boost revenues and restructure loans, their cumulative cash could shrink
62 percent to about $8.6 billion by year's end, estimated Philip
Baggaley, chief credit analyst at Standard & Poor's. None of the
major American carriers are expected to earn a profit in 2008, except
Southwest Airlines, which is expected to benefit from costly hedges
against rising fuel costs.
href='http://www.chicagotribune.com/business/chi-mon-airlines-fuel-survivemay19,0,7935008,print.story'>Read
more.
Union Rejects American Airlines
Offer
Negotiators for union mechanics and bag handlers at American Airlines
have rejected a contract proposal from American Airlines that called for
lump-sum payments instead of wage increases, the Associated Press
reported on Saturday. The union's top leaders recommended that
rank-and-file employees be allowed to vote on the proposal, but the
negotiating committee for the Transport Workers union rejected the
package. American's proposal called for lump sum payments upon signing
of 5 percent of a worker's pay excluding overtime earnings, and 3.5
percent of such pay a year later. The airline also indicated it would
explore 'variable' pay tied to corporate and local business
results.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/17/AR2008051701997.html'>Read
more.
American LaFrance Moves Ahead on Bankruptcy
Plan
Fire truck manufacturer American LaFrance's bankruptcy reorganization
plan won the approval of the company's creditors, clearing the way for
the firm to emerge from bankruptcy next month, the Associated Press
reported yesterday. The approval of the plan by creditors leaves only
one remaining hurdle in American LaFrance's efforts to complete its
reorganization - the confirmation of the plan by the bankruptcy court,
scheduled for May 22. Over the last four months, American LaFrance has
closed six of its 10 facilities and reduced its overhead costs by 50
percent. The reorganization plan keeps American LaFrance's plant in
Hamburg open, while closing facilities in Florida, South Carolina,
Pennsylvania and Oregon.
href='http://www.buffalonews.com/businesstoday/localbusiness/story/336190.html'>Read
more.