August 12, 2004
Retail Sales Post
Smaller-than-expected Gain
U.S. shoppers
returned to stores in July, but retail sales for the month posted a
smaller-than-expected gain as consumers coped with the recent rises in
energy prices, a government report showed today, Reuters reported. The
Commerce Department said retail sales rose 0.7 percent in July to a
seasonally adjusted $336.50 billion, less than economists had expected
but a rebound from the revised 0.5 percent decline in sales in June. The
figures reflected a mixed picture of consumer spending, which accounts
for about two-thirds of overall
U.S.
economic activity. With June sales revised up from the previously
reported 1.1 percent decline, the 'soft patch' in spending noted by
Federal Reserve Chairman Alan Greenspan and others was not as deep as
believed. However, the smaller-than-expected July rebound showed
shoppers still trying to cope with higher energy prices and stagnant
wage growth, the newswire reported.
Toys R Us May Sell Core
Retail Business
Retailer Toys R Us Inc.,
slammed by intense competition from discounters such as Wal-Mart, may
sell its toy business and focus on its fast-growing Babies R Us unit,
the company said on Wednesday, Reuters reported. Toys R Us said it plans
to separate the ownership of its two businesses and is looking at many
ways to accomplish this, including a spin-off of Babies R Us. By
separating the businesses, Babies R Us would be able to thrive and build
on its core market of supplying not just baby toys, but gear like
bedding, furniture, strollers and clothes to expectant and new
parents.
The toy business, which targets
a much different customer, will face a dramatic cut in operating
expenses and capital in an effort to boost its cash flow, the company
said. Prudential analyst Mark Rowan described the move as 'extremely
positive' and said one of the critical pieces to unlocking shareholder
value in Toys R Us is separating its 'crown jewel, Babies R Us,' the
newswire reported.
Union Asks for
Trustee Appointment
The International Association
of Machinists and Aerospace Workers on Wednesday said it filed a motion
with the bankruptcy court asking that a trustee be appointed to oversee
United Airlines' bankruptcy case, Reuters reported. United, the world's
second-largest airline and a unit of UAL Corp., filed for bankruptcy in
December 2002. Late last week United asked Judge Eugene
Wedoff for another extension on the period in which it can file
its own exclusive reorganization plan -- this time until Dec. 30. The
union also said it filed a separate motion objecting to the
reorganization plan extension request, the newswire reported.
Air
Canada CEO
Says Restructuring Effort 'Paying Off'
Air
Canada
CEO Robert Milton says the bankrupt airline's restructuring is 'paying
off,' the online Wall Street Journal reported. In a
recorded
message to employees also published on the company's web site, Milton
noted that the second-quarter financial report was 'highly encouraging'
and predicted an 'equally good' third quarter. The airline reported
operating profit of C$22 million in the second quarter, a dramatic
turnaround from the operating loss of C$270 million a year earlier.
Operating revenues rose 14 percent, yields improved and unit costs fell.
Air Canada has been restructuring under bankruptcy protection since
April 1, 2003. It is scheduled
to emerge from bankruptcy protection on Sept. 30. Creditors are expected
to vote on the company's reorganization plan on Aug. 17.
RCN Gets OK
for Chicago Unit to Tap Lender's Cash Collateral
RCN Corp. got approval from the
U.S. Bankruptcy Court in
Manhattan to amend a
cash collateral agreement, allowing affiliate RCN Cable TV of Chicago
Inc. to tap into funds owed to RCN's lenders to operate its
business. The bankruptcy court in June issued an order approving
RCN's use of cash totaling $432.5 million owed to its pre-chapter 11
lenders, led by J.P. Morgan Chase Bank. The order is set to expire Oct.
31, unless the lenders agree to an extension. An order, signed
Friday by Judge Robert Drain, said the group of RCN debtors, not
including RCN Chicago, can use existing accounts and engage in
intercompany transactions, including exchanging funds with affiliates
that aren't under chapter 11 protection.
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Winstar Suit Against Lucent
Nears Trial, Venue Uncertain
Winstar Communications
Inc.'s three-year-old lawsuit against Lucent Technologies
Inc. is finally getting close to coming to trial. Where the trial
will take place remains uncertain, however, as the parties have
differing views as to whether the trial should go forward before a jury
outside the bankruptcy case or before a judge in bankruptcy court.
In court papers, Lucent said it has 'an underlying constitutional right'
to a jury trial on the suit Winstar brought against it in
2001.
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Archbishop Sets Precedent
With Bankruptcy Testimony
Portland Archbishop John G.
Vlazny stepped into history Friday as the first
U.S. archbishop
forced to testify in an archdiocese bankruptcy proceeding, the
Portland Oregonian reported. The four-hour hearing touched
on
subjects that ranged from the Archdiocese of Portland's sex-abuse
policies to First Amendment issues to the amount of control asserted
over Vlazny by the
Vatican .
Read the full article at
>
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.
Green Party's Uphill
Battle for
Senate Seat
Green Party candidate John
Amarilios, a Westport
bankruptcy lawyer, said he would love to have the Democratic Party help
his bid to capture the 36th District state Senate seat from longtime
incumbent William Nickerson, a Greenwich
Republican, greenwichtime.com reported. Greenwich Democrats say
they are willing to talk, but have yet to hear from the third-party
candidate, according to Jim Himes, chairman of the Democratic Town
Committee. Read the full article at
href='http://www.greenwichtime.com/news/local/scn-gt-amarilios3aug08,0,2555002.story?coll=green-news-local-he'>
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.
Enron's Lay Denied September Trial Date
Lawyers for former Enron Corp.
Chief Executive Kenneth L. Lay yesterday urged a federal judge to
exclude him from a broader fraud case against the
Houston energy
company's top executives and send him to trial alone within weeks, the
Washington Post reported. But the judge deflected Lay's
request
for a trial to start Sept. 14 and instead said he would rule on several
motions yet to be filed by defense lawyers but not until late September
or October.
Yesterday's court hearing was a
prelude to what prosecutors have called the premier trial involving
corporate fraud. Enron's December 2001 bankruptcy filing was the first
of several business scandals and led to corporate-reform legislation,
the newspaper reported.
How Discount Airlines
Profited from Their Bigger Rivals' Woes
Over the past three years, the big
global airlines, like AMR Corp.'s
American and UAL Corp.'s United, were affected by terrorism, recession,
war, the SARS epidemic and high fuel prices. As they shrank to ride out
the storm, nimble discounters quickly moved in. When the big carriers
furloughed workers, discounters hired. As struggling airlines abandoned
gates, upstarts grabbed the chance for a beachhead at airports never
open to them before. And as the biggest airlines canceled aircraft
purchases, the discount carriers cut deals to take new planes. Read the
full article at www.wsj.com
(subscription required).
Crescent Jewelers Files for
Chapter 11 Bankruptcy
Crescent Jewelers, the largest
retail jewelry chain in
California , announced on
Wednesday that it filed for chapter 11 bankruptcy in an effort to ease
the burden of debt incurred over the past five years and revive its
growth prospects, Reuters reported. The closely-held
Oakland , Calif.-based
company, which filed a voluntary petition in
the San
Francisco bankruptcy court, said it expects
to continue doing business as usual.