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Labor Officials Offer Bottom Line On Asbestos Litigation
Bill
In a move that could prove to be a turning point in ongoing negotiations
on asbestos litigation reform legislation, labor officials have
effectively drawn their bottom line on overall liability costs, sources
said, CongressDaily reported. In a meeting on Friday with Senate
staff, industry representatives and their insurers, AFL-CIO officials
presented case values and medical criteria that participants said put
compensation costs for victims in the range of $121 billion to $138
billion, reported the newswire. Labor's projections, which some
non-labor sources labeled as an 'opening bid,' is an amount that at
least keeps everybody at the table, one source remarked, according to
CongressDaily. Industry players will get their chance to respond
to the offer at another meeting scheduled for Wednesday among the same
parties. Insurers have continued to insist they would hold fast to their
earlier commitment with industry to pay $45 billion of the total. Labor
has not set an overall liability figure, preferring to focus on the
individual case values and letting those values dictate the final
number, as opposed to working backwards from a predetermined amount.
Labor's calculations are part of an intensive negotiation that has
stretched through the April recess to try to calculate an allocation
formula for the trust fund, reported the newswire.
Bankruptcy Deadline Dispute to Get U.S. Supreme Court
Hearing
The U.S. Supreme Court will use a dispute between two Illinois doctors
to clarify the
deadline for objecting to an individual's plan to wipe out debts in a
bankruptcy case, Bloomberg News reported. The court will hear Andrew J.
Kontrick's effort to keep his former partner in a cosmetic-surgery
practice from blocking approval of Kontrick's bankruptcy plan. Robert A.
Ryan says Kontrick owes him $369,324, and a lower court ruled that
Kontrick could not wipe out the debt. Kontrick argues that Ryan missed
the 60-day deadline to object to his bankruptcy plan, and that
Kontrick's failure to immediately raise the issue didn't waive the
deadline. Ryan's lawyers said the lower court properly ruled that
Kontrick waived the deadline for Ryan to file his objection.
Ryan was awarded the money in an arbitration over the medical
practice. Kontrick filed for chapter 7 bankruptcy in 1997 and sought to
cancel the debt. Ryan objected, claiming Kontrick tried to hide assets
by depositing his paychecks in a bank account in
his wife's name. A bankruptcy judge in Chicago, a federal judge and the
Chicago-based 7th U.S. Circuit Court of Appeals ruled for Ryan. The
courts said Kontrick waited too late to raise the argument that Ryan
missed the deadline to object, reported the newswire. Kontrick now is
asking the Supreme Court to rule that the deadline remained in force
even if he didn't raise the issue soon enough. That would mean Ryan
filed his objection too late and the block on Kontrick's bankruptcy plan
should be lifted, Kontrick's lawyers say. The justices will hear
arguments in their term starting in October and will rule by July 2004,
reported Bloomberg.
AMR
AMR Shares, Bonds Rise After Bankruptcy Averted
AMR Corp. shares and bonds rose after its American Airlines unit secured
agreements for $1.8 billion in yearly labor savings to help avoid
bankruptcy last week, Bloomberg News reported. AMR rose 24 cents, or 5.5
percent, to $4.64 at 11:13 a.m. in New York Stock Exchange composite
trading. The shares have fallen 79 percent in the past year. An
agreement with the flight attendants union last week prevented a
bankruptcy filing. The carrier's other major worker unions also agreed
to job, pay and benefit cuts the carrier wants as part of $4 billion in
yearly cost reductions to stem losses and
compete against low-cost rivals, reported the newswire.
Mechanics Union in New York Wins Time to Consider American
Airlines' Contract
A federal judge has given some mechanics in New York two weeks to decide
if they want to vote on improvements to a new contract that gives
American Airlines $620 million in annual concessions, the St. Louis
Post-Dispatch reported. A lawyer for Local 562 of the Transport
Workers Union in New York said on Monday that members asked for more
time to get details of the contract that takes effect on Thursday
because the 'factual scenario changed radically' since the local sought
the court's review nearly two weeks ago. A spokesman for American said
the mechanics' legal action won't stop it from starting a restructuring
plan that lets the airline shed 7,200 employees, cut salaries and change
work rules, reported the newspaper. On Friday, American avoided
bankruptcy when union leaders agreed to accept new proposals that, when
combined, give the airline $1.6 billion in annual concessions.
UAL Seeks to End Bond Payments at Denver Airport, Trustee
Says
UAL Corp.'s United Airlines wants to get out of making lease payments at
Denver International Airport while still using facilities paid for with
$262.4 million
of bonds, Bloomberg News reported. The carrier's request in U.S.
Bankruptcy Court to be relieved of lease payments while not being forced
out by the city was disclosed in a notice HSBC Bank USA sent to holders
of bonds backed by the airline. 'I don't know of any airline that has
ever tried to get out of making debt-service payments while trying to
stay in a facility,'' said Fred Kelly, manager of $201 million of
municipal bonds for Denver-based Colorado Bondshares, which owns some of
the United bonds, reported the newswire.
Chicago Bankruptcy Boom May Be Short-lived
Chicago's run of hosting major U.S. chapter 11 bankruptcy cases may be
over, Reuters reported. Bankruptcy lawyers say big companies trying to
reorganize might shy away from courts in the nation's third-largest city
after a federal judge decided this month to disallow payments that
discount retailer Kmart Corp. made to suppliers to keep goods flowing
into its stores. The ground-breaking decision came as Chicago was
cementing its reputation as a major chapter 11 destination, with big
companies like Kmart, United Airlines' parent UAL Corp. and finance and
insurance company Conseco Inc. filing there in 2002 alone.
The Chicago courts have taken steps to be more efficient in recent
years, with more judges available to dispose of complex matters quickly
while other popular court systems remain clogged with heavy case loads.
But now some local bankruptcy lawyers are worried the big cases will go
elsewhere, and their jobs could be in jeopardy. 'The District Court's
opinion is a tremendous blow to the efforts of the Chicago bench and bar
to fashion their bankruptcy court system in the mold of Delaware and New
York,' said Robert Feinstein, a lawyer and managing shareholder
of Pachulski, Stang, Ziehl, Young, Jones & Weintraub in New York.
'It really casts doubt on future large chapter 11 filings in Chicago,'
reported the newswire
Spiegel to Ask Bankruptcy Court to Close 60 Eddie Bauer
Stores
Spiegel Inc. said it will ask a bankruptcy court for approval to close
60 Eddie Bauer stores, Bloomberg News reported. The stores targeted
include 51 apparel stores, eight home stores and one outlet store in the
United States, the company said in a statement sent by PRNewswire. Eddie
Bauer operates 529 stores in the United States and Canada, including 382
apparel stores, 45 home stores and 102 outlet stores, Bloomberg
reported.
XO Names Grivner as CEO
XO Communications Inc. named Carl Grivner, the former chief operating
officer of Global Crossing Ltd., as chief executive, Dow Jones Newswires
reported. In his new post, which becomes effective May 15, Grivner will
succeed Daniel Akerson. Akerson resigned on Jan. 16 as the
telecommunications company emerged from bankruptcy. Madison, N.J.-Global
Crossing said Chief Executive John Legere would take over Grivner's
functions. Global Crossing filed for bankruptcy protection in January
2002 and has said it expects to emerge from chapter 11 in the first half
of this year, reported the newswire.
WorldCom Had Combined Loss of $289 Million in February, March
Clinton, Miss.-based WorldCom Inc. had a combined net loss of $289
million in February and March as sales fell, Bloomberg News reported.
The bankrupt company had net income of $43 million in March, from a net
loss of $332 million in February, the company said in a statement
distributed by PR Newswire. Sales in March were $2.1 billion, up from
$2.03 billion in February, the newswire reported. WorldCom is seeking to
exit bankruptcy by October. The company reported net income of $155
million in January, when sales were $2.16 billion.
Encompass Services Unsecured Creditors Seek Chapter 11
Trustee
The unsecured creditors' committee of Encompass Services Corp. is asking
the U.S. Bankruptcy Court in Houston to appoint a chapter 11 trustee to
sell the company's remaining assets, propose a liquidation plan and
administer the firm's affairs, according to Dow Jones Newswires. The
committee said Encompass Services is seeking to complete its proposed
$40 million sale of its residential services business only under terms
of the company's chapter 11 plan, reported the newswire. The committee
said it opposes confirmation of the plan, which would release claims
against the firm's officers and directors. The court is scheduled to
consider the matter at a hearing on May 7.
FirstEnergy Joins Chapter 11 Petition Against NRG
Dow Jones reported that three subsidiaries of FirstEnergy Corp. have
filed to join an involuntary bankruptcy petition against Xcel Energy
Inc.'s financially troubled power generation subsidiary, NRG Energy Inc.
According to the newswire, FirstEnergy's filing in the U.S. Bankruptcy
Court for the District of Minnesota is linked to a failed $1.5 billion
power plant sale to NRG and attempts to recover damages associated with
that deal through arbitration. By joining privately held Fortistar
Capital Inc., Fortistar Methane LLC and units of contractor The Shaw
Group Inc. in seeking bankruptcy for NRG, FirstEnergy is likely to
complicate NRG's efforts to have the involuntary bankruptcy petition
dismissed so that it can file chapter 11 on its own terms as part of a
plan to restructure its bank and bond debt, reported the newswire. The
involuntary bankruptcy petition was originally filed by seven former NRG
executives late last year. Though NRG has since settled with the former
workers, the court hasn't yet dismissed the case. NRG needs to get
beyond the involuntary petition to proceed with plans to restructure
billions in debt through a prearranged chapter 11 filing, Dow Jones
reported.
Airline Workers Losing Perks (New York Times)
An article in the New York Times argues that the billions of
dollars in losses incurred by the airline industry have forced not just
deep pay cuts on airline unions. They also have brought an overhaul of
the so-called work rules that will drastically revamp how employees of
the major airlines do their jobs. According to the article, 'the
inspiration is profitable airlines like Southwest and JetBlue, and the
goal is survival.' To read the full article, point your browser to
href='http://www.nytimes.com/'>www.nytimes.com.
Conseco Bankruptcy Handlers Are Cashing In as Tab Runs into
Millions
As Conseco continues its tumble through bankruptcy, more than a dozen
legal, investment and accounting firms have applied for roughly $10.2
million in services and expenses after the Carmel, Ind.-based insurer
filed for chapter 11 bankruptcy protection in mid-December, the
Indianapolis Star reported. Although the third-largest bankruptcy
in U.S. history is in its fourth month, most bills involve costs through
the end of February.
'Sometimes the concerns are ethical, but overall there's a general
notion among critics that there are more efficient ways to reorganize a
company and lower transition costs than the current system,' said Thomas
Allington, a law professor at the Indiana University School of
Law-Indianapolis. On the other hand, companies with highly complex
financial and subsidiary networks such as Conseco have few to blame
other than themselves for the high legal costs that bankruptcy incurs.
'There's no question that with a company like Conseco, a lot of things
must be sorted through,' Allington said. 'That requires lots of
negotiation and disclosures, and these things tend to generate a lot of
billable hours,' reported the newspaper.
AVS Electric Busmaker Files For Bankruptcy
Advanced Vehicle Systems Inc., the Chattanooga, Tenn.-based firm that
has made electric buses since 1993, filed a chapter 11 bankruptcy on
Monday, chattanoogan.com reported. The company said it would
continue to operate during the reorganization. Company officials said
recently they had asked creditors to cooperate as the firm sought to
deal with financial troubles. The firm had been under new management as
Chairman Joe Ferguson recently retired. Jerry Graves, the new AVS
president, said, 'The filing was necessary due to current financial
conditions and in order to restructure the company and continue as a
viable, ongoing business.'
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