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April 14, 2006
size='3'>Autos
If
w:st='on'>
id='1'>Detroit
size='3'>U.S.
size='3'>May Not Replay the Bailout Role
Similar to
Chrysler’s situation nearly 25 years ago, General Motors, which is
skirting with bankruptcy, and Ford are staggering under the costs of
providing health benefits for workers and retirees, providing few cars
that excite consumers and still struggling to compete against their
Japanese (and Korean) rivals, the
size='3'>New York Times reported today. And
now it is GM that is skirting the edge of financial disaster. In
contrast to the 1970’s, the government today shows no signs of
hurrying to the auto industry's rescue. American car companies and the
United Automobile Workers have lost much of their political influence as
their share of the nation's output and employment has shrunk. 'In the
current climate, the government would be very reluctant to step in and
protect one company in a much larger industry,' said Stewart J. Schwab,
an expert in labor law and dean of Cornell Law School. As Chrysler was
tottering in 1979, President Jimmy Carter and the Democratic-controlled
Congress cobbled together a rescue plan that included $1.5 billion in
federal loan guarantees and a package of concessions worth several
billion dollars more from others interested in Chrysler's survival,
including its union, bankers and dealers. Yet despite the long
list of woes currently plaguing the automotive industry, neither the
White House nor Congress is rushing to the rescue.
href='http://www.nytimes.com/2006/04/14/automobiles/14bailout.html?_r=1&oref=…'>Read
more.
GM
to Save $13 Billion on Health Care Deal
General Motors Corp. said it
expects to see net cost savings of about $13 billion over six years from
its health care deal with the United Auto Workers union, Reuters
reported yesterday. GM, in a Securities and Exchange Commission filing,
said it will begin accounting for its contributions to the Defined
Contribution Voluntary Employees' Beneficiary Association (DC VEBA)
during the first quarter of 2006 and will take a $1 billion charge
before taxes in the quarter. GM said it will begin to realize a
reduction in health care expense in the third quarter. Under the
agreement struck between GM and the UAW last October, hourly retirees
will have to pay monthly contributions, annual deductibles and
co-insurance costs for the first time, amounting to $370 a year. GM will
also have to make a $3 billion donation to DC VEBA over the next six
years. The deal remains in effect until at least September 2011, after
which either GM or the UAW may cancel upon 90 days written
notice.
href='http://money.cnn.com/2006/04/13/news/companies/gm.reut/index.htm'>Read
more.
id='3'>Russian Official Files for Chapter 15 Bankruptcy to Avert
Yukos Asset
w:st='on'>Sale
A bankruptcy supervisor
for Russian oil company OAO Yukos said he had won a temporary injunction
from a
face='Times New Roman' size='3'>New York
court banning the company from selling its assets as it
goes into bankruptcy hearings, the
size='3'>Wall Street Journal reported today.
The injunction, which the court granted in response to a request for
bankruptcy protection, was aimed at stopping managers at
size='3'>Russia
biggest oil company from selling off a controlling stake in a key Baltic
oil refinery, Mazeikiu Nafta AB in
w:st='on'>
size='3'>Lithuania
size='3'>, according to the bankruptcy supervisor, Eduard Rebgun. Rebgun
dismissed Yukos Chief Executive Steven Theede's contention that the 53.7
percent stake in Mazeikiu Nafta could be sold since it was owned by a
foreign-registered subsidiary and did not appear in Yukos's accounts.
Western banks are owed nearly $500 million by Yukos, which filed for its
bankruptcy in March. It later emerged that state-controlled oil group
Rosneft, which is widely expected to gather up Yukos's remaining assets
in the event that it is liquidated, had acquired that debt from the
banks. Yukos is seeking to sell its 53.7 percent stake in Mazeikiu Nafta
to the Lithuanian government despite a Russian court order banning the
sale while the company is in bankruptcy proceedings. On Thursday, Rebgun
filed for bankruptcy-court protection under chapter 15 of the U.S.
Bankruptcy Code, arguing that by selling the asset Yukos would be
harming the interests of its creditors.
href='http://online.wsj.com/article_print/SB114501004498826016.html'>Read
more .
size='3'>(Registration required)
Delta
Creditors Unsure of Airline’s Assets
If a federal bankruptcy
judge decides in the coming days that a pilot strike at Delta Air Lines
Inc. has irreparably crippled the carrier, companies that Delta owes
money to, such as The Boeing
face='Times New Roman' size='3'>Co.
IBM and Michelin North America Inc., may find themselves with little
recourse, the Fulton
County Daily Report reported today. Delta's
individual assets could fetch billions of dollars, but the airline is
worth far more in operation than liquidation, which is why virtually all
creditors want to avoid liquidation, said C. David
Butler , a former trustee for bankruptcy courts in
size='3'>Georgia
size='3'>Florida
likely that Delta, in liquidation, would have a difficult time selling
its planes and its aircraft leases on the open market. If Delta were to
liquidate, determining how much the company is worth is unclear because
the company has not yet filed a detailed statement of its assets and
liabilities with the U.S. Bankruptcy Court in the Southern District of
New York. The company was supposed to have submitted that document soon
after it filed for bankruptcy on Sept. 14, but has been granted three
extensions.
href='http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1144933474097'>Read
more.
Judge
Allows Creditors to Withhold Info in Riverstone Case
A federal bankruptcy
judge said the creditors’ committee for bankrupt Riverstone
Networks Inc. doesn't have to share sensitive information on the
bankrupt Ethernet infrastructure provider with other creditors it
represents, Portfolio
Media reported yesterday. Judge
Christopher
Sontchi, of the U.S. Bankruptcy Court for the
District of Delaware, said the unsecured creditors can limit information
they turn over to other creditors in the case after recent changes to
federal bankruptcy law brought the issue to the forefront. The committee
will now be free to withhold any confidential or
privileged
size='3'>information until a court orders it to do so,
but it will have to provide an e-mail address for
creditors to submit questions and create a Web site with general
information about the case. Creditors seeking information will have a
fairly quick turnaround since the judge’s order requires the
committee to respond to creditors' information requests within 20
days.The case
is Riverstone Networks
Inc., case number 06-10110-CSS, in the
size='3'>United
States.
id='6'>Allied Holdings Driven to File Motion for Interim
Relief
Citing fears of
liquidation, auto-hauling company Allied Holdings Inc. filed a motion in
bankruptcy court seeking interim relief from its collective bargaining
agreement with the Teamsters Union,
size='3'>Portfolio Media reported yesterday.
The Atlanta-based company filed the motion with the U.S. Bankruptcy
Court for the Northern District of Georgia, which is
size='3'>overseeing its chapter 11 restructuring. The proposal will cut
wages by 10 percent for all collective-bargaining employees of
Allied’s subsidiaries represented by the Teamsters. This would
save $2 million per month, according to Allied. The motions will also
let Allied execute unpaid furloughs for its nonbargaining, salaried
employees. If the motion is approved by the court, unpaid furloughs will
go into effect for most employees in June 2006. Employees making less
than $80,000 per year would take five-day furloughs, while those making
more than $80,000 would take up to 10 days. The company said these
requirements will allow the company to reduce its costs by around
$200,000 in May and $800,000 in June 2006.
Telos
Corporation Denied Motion to Dismiss Case
The Baltimore Maryland
Circuit Court has denied motions to dismiss filed by defendants in
litigation involving Telos Corp., according to a release yesterday from
Warner Stevens, L.L.P., a
w:st='on'>Fort
Worth
firm. The Costa Brava Partnership, a Massachusetts-based investment fund
represented by Warner Stevens, alleged that Telos and certain of its
officers and directors engaged in conduct harmful to creditors and
shareholders such as
size='3'>Costa Brava
dismissal of the action, Telos contended that the
w:st='on'>
size='3'>Maryland
had no jurisdiction to hear the matter, as the principals allegedly
resided outside that state. The court held that officers and directors
of corporations organized under the laws of the state of
size='3'>Maryland
Telos are deemed to have sufficient contacts in that state for the court
to assert jurisdiction and so declined to dismiss Costa Brava's
action.
USA
Commercial Mortgage Company Files for Chapter 11
USA Commercial Mortgage
Company, based in Las Vegas, announced that it and
certain of its affiliates have filed for chapter 11 bankruptcy,
according to a company press release today. The company, which filed its
petition with the U.S. Bankruptcy Court for the Southern District of
Nevada, also does business under the name USA Capital. In connection
with the company's filing, USA Commercial Mortgage said it is in
discussions with leading financial institutions to provide
debtor-in-possession (DIP) financing. USA Commercial Mortgage Company is
seeking a $100 million credit facility to fund operations and provide
capacity to fund new loans. The company said it has retained Mesirow
Financial Interim Management to assist in reorganizing operations and
secure DIP financing in order to rebuild the company's core loan
origination, underwriting and servicing operations.
href='http://sev.prnewswire.com/banking-financial-services/20060413/LATH07014…'>Read
more.