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U.S. Economy Appeared to Stall in Fourth Quarter
Recent disappointing economic reports suggest the nation's economy
barely grew at the end of last year and might have contracted, a
development that is sure to raise new concerns about an already
disappointing recovery, the Wall Street Journal reported. Factory
production declined in December and the nation registered a record trade
deficit in November, according to two government releases last week.
Other reports earlier this month showed employment levels shrank in both
November and December.
According to a survey of 20 economists by Macroeconomic Advisers, a St.
Louis-based forecasting firm, the consensus is now that the nation's
gross domestic product -- the broadest measure of economic output --
expanded at a tiny 0.5 percent annual rate in the fourth quarter of
2002, reported the newspaper. And some economists, including those from
Nomura Securities International, J.P. Morgan Chase and Macroeconomic
Advisers itself, revised their fourth-quarter growth estimates into
negative territory. 'A double-dip scenario is probably going to be
talked about quite a bit more in the next couple of weeks,' said Bill
Sharp of J.P. Morgan Chase, reported the Journal.
US Airways Wins Court Approval to Solicit Creditor Plan Support
US Airways Group Inc. won a federal judge's approval to solicit creditor
support for its bankruptcy reorganization plan, putting the
seventh-largest U.S. airline a step closer to coming out of chapter 11,
Bloomberg News reported. U.S. Bankruptcy Judge Stephen S.
Mitchell in Alexandria, Va., approved the reorganization plan's
disclosure statement on Friday, according to court papers. With approval
of the plan disclosure statement, US Airways can submit the proposal to
creditors for a vote. The Arlington, Va.-based airline has said it
expects emerge from bankruptcy protection as early as March. US Airways,
with more than $10 billion in debt, filed for bankruptcy in August as
losses widened after the Sept. 11 terrorist attacks, reported the
newswire.
Owens Corning Files Plan to Resolve Asbestos Lawsuits
Owens Corning filed a bankruptcy reorganization plan that would allow
the largest U.S. insulation maker to resolve $16 billion in asbestos
claims and emerge from chapter 11, Bloomberg News reported. Owens
Corning said the plan would give asbestos claimants most of the
reorganized company's shares, which would be distributed through a trust
created under the proposal. Cash, notes and insurance proceeds would
also be used to fund the trust. Creditors will receive 'partial
payment'' of their claims and holders of $400 million in bank claims
will be given preference over other creditors, the company said,
reported the newswire.
ADELPHIA COMMUNICATIONS
Adelphia Founder John Rigas, Family Ask Judge to Throw Out
Suit
Adelphia Communications Corp. founder John Rigas and six members of his
family asked a federal bankruptcy judge to throw out a lawsuit accusing
them of violating federal racketeering laws, Bloomberg News reported.
Adelphia sued Rigas, his wife, three sons and daughter in a civil case
filed on July 24 in the U.S. Bankruptcy Court in Manhattan. The company
sought damages and asked Judge Robert Gerber to freeze the
family's assets until there was a full accounting. 'Adelphia has failed
to allege legally sufficient claims against any of the Rigas
defendants,'' the Rigases said in court filings on Friday, reported the
newswire. They said Adelphia was trying 'to blame all of its problems on
the individuals who founded and built it into one of the largest cable
providers in the United States,' according to the newswire. Adelphia
filed for chapter 11 protection on June 25, after running up more than
$20 billion in debt, reported Bloomberg.
Adelphia Offers Top Positions To Former AT&T
Executives
The board of Coudersport, Pa.-based Adelphia Communications Corp.
approved employment contracts with former AT&T executives William
Schleyer and Ron Cooper, paving the way for them to take over the two
top jobs at the scandal-plagued cable company, according to people with
knowledge of the situation, the Wall Street Journal reported. The
contracts must be approved by the bankruptcy court that has been
overseeing Adelphia's restructuring since the company filed for chapter
11 bankruptcy-court protection in June. If approved, Schleyer will
become chief executive and Cooper will become chief operating officer.
Both men held the same jobs at AT&T Corp.'s cable unit, AT&T
Broadband, which was acquired by Comcast Corp. last year, reported the
Journal.
PG&E Unit Defaults on $2.9 Billion, Reports $247.8 Million in
Costs
PG&E Corp.'s power-plant-development and trading unit had costs of
$247.8 million in the fourth quarter to settle canceled contracts after
it defaulted on $2.9 billion in debt and equity agreements, Bloomberg
News reported. Lenders on three power plants under construction by
PG&E National Energy Group also agreed to fund completion of the
projects, in exchange for ownership of the plants and a fourth facility
in Massachusetts, PG&E said in a filing late on Thursday with the
U.S. Securities and Exchange Commission, reported the newswire.
Chertoff to Be Appointed by Bush to Federal Bench
Assistant Attorney General Michael Chertoff, who has led criminal
investigations into Enron Corp. and other corporate accounting scandals,
will be nominated to the 3rd U.S. Circuit Court of Appeals, aides to New
Jersey's two senators said, Bloomberg News reported. Chertoff, a former
U.S. attorney for New Jersey, heads the Justice Department's criminal
division and served as counsel to the Senate Whitewater committee that
probed former President Bill Clinton's Arkansas land dealings. Since
Enron filed for bankruptcy almost a year ago, Chertoff has been in
charge of investigations into accounting scandals involving publicly
traded companies, according to Bloomberg. He played a leading role in
prosecuting Arthur Andersen LLP, the accounting firm convicted in June
of obstructing justice for destroying Enron documents, reported the
newswire.
WHX Corp.'s Wheeling-Pittsburgh Steel Unit Lays Off 100 Workers
WHX Corp.'s Wheeling-Pittsburgh Steel unit, which has been operating
under chapter 11 bankruptcy protection since November 2000, said it laid
off about 100 workers, effective immediately, Bloomberg News reported.
Wheeling-Pittsburgh Steel will decide which layoffs will become
permanent during the next several months, the company said in a press
release distributed by PR Newswire. The layoffs will affect every major
company facility in the Ohio and Monongahela valleys. The unit has cut
more than 600 jobs since it filed for chapter 11 bankruptcy protection,
reported the newswire.
ChevronTexaco, Dynegy to End Trading-Contract Agreement
ChevronTexaco Corp. will end an agreement with Dynegy Inc.-under which
the beleaguered energy company had marketed the oil giant's natural
gas-and re-enter the wholesale business, the Wall Street Journal
reported. ChevronTexaco, the nation's second-largest oil company and
third-largest producer of natural gas, said on Friday it will open a
100-person trading desk in Houston, with several traders expected to be
former Dynegy employees.
Dynegy, under tremendous financial pressure to avoid bankruptcy, had
asked ChevronTexaco to consider an early end to the agreement after
Dynegy announced in October that it would exit the natural-gas marketing
and trading business. Dynegy paid ChevronTexaco around $11 million
related to ending the natural-gas contracts and transferring to
ChevronTexaco certain third-party contracts, reported the newswire.
FAO Retains Morgan Joseph for Investment Banking Services
FAO Inc. hired investment banker Morgan Joseph & Co. to raise equity
capital as the bankrupt toy retailer seeks to emerge from chapter 11 in
the second quarter, Dow Jones reported. The retention agreement with
Morgan Joseph is subject to court approval, FAO said in a statement
Friday. On Monday, FAO filed for bankruptcy protection in Wilmington,
Del., listing consolidated assets of $257.4 million and debts of $238.4
million, following a difficult holiday season. A day after the filing,
the retailer won interim approval to use its secured lenders' cash
collateral to fund operations and pay employees, reported the
newswire.
Peregrine Systems Says It Plans to File Reorganization Plan
Software company Peregrine Systems Inc. has objected to a request from
its unsecured creditors to end the company's exclusive period to file
and solicit support for a chapter 11 reorganization plan, arguing that
the request is premature, Dow Jones reported. The company said it
intends to file a plan and disclosure statement by Monday, according to
court papers obtained on Friday. The 120-day period during which only
Peregrine may file a plan expires that day. The San Diego company filed
for chapter 11 bankruptcy protection with the U.S. Bankruptcy Court in
Wilmington, Del., on Sept. 22. The creditors' committee filed its
request late in December, fearing that Peregrine was trying to sell its
remaining business operations outside a chapter 11 plan. The committee
is seeking to file its own reorganization plan, reported the newswire.
The bankruptcy court is scheduled to consider the matter at a hearing
Jan. 28.
AT&T Canada on Track To Complete Restructuring by End of First
Quarter
AT&T Canada remains on track to complete its capital restructuring
at the end of the first quarter, Dow Jones reported. In a news release,
the company said it has now established new commercial agreements with
AT&T Corp., defining how the companies will serve customers as
AT&T Canada transitions to a fully independent and re-branded
company. AT&T Canada also said the Ontario Superior Court of Justice
has granted an order for it to disseminate the company's capital
restructuring plan to its bondholders and affected creditors. It expects
to hold a meeting of these creditors to vote for approval of the plan on
Feb. 20, reported the newswire.
Digital Teleport Agrees to $38 Million Sale to CenturyTel
Digital Teleport Inc. has agreed to sell most of its assets to
CenturyTel Inc. for about $38 million, subject to higher bids at
auction, Dow Jones reported. On Tuesday, Digital Teleport will ask
Judge Barry S. Schermer of the U.S. Bankruptcy Court in St. Louis
to approve the bidding procedures over the proposed sale, as well as a
$700,000 breakup fee payable to CenturyTel if it is outbid at auction or
if the company confirms a stand-alone reorganization plan instead of the
asset sale. Digital Teleport assets worth about $10 million have been
excluded from the proposed deal with CenturyTel, according to court
papers filed by the company, reported the newswire.
Agway Announces Leadership Change
Agway Inc. President and Chief Executive Officer Donald Cardarelli will
resign April 1 following the company's completion of its restructuring
and sale of its lease financing business, Dow Jones reported. 'This was
a decision that the board and I reached after assessing our progress to
date and our needs going forward,' Cardarelli said in a press release
Friday. 'The next phase is to develop the plan for the Company's
emergence from chapter 11. That plan should be developed and carried out
under leadership that is expected to be part of Agway's future,'
reported the newswire. Agway named Michael Hopsicker, a 13-year company
veteran, as Cardarelli's replacement. Agway, which is an agricultural
cooperative owned by 69,000 Northeast farmers, filed for chapter 11
bankruptcy protection on Oct. 1.
Two Ex-Enron Board Members Give Grand Jury Testimony
A federal grand jury reviewing former Enron chairman Kenneth Lay's
activities reportedly heard from two former members of the fallen energy
trader's board about Lay's stock trades and company loans to him, the
Associated Press reported. The Houston Chronicle quotes unidentified
sources as saying Charles LeMaistre and John Duncan were called this
week as information witnesses on Lay. Federal investigators have been
trying to determine if Lay broke insider-trading laws when he sold $70
million in stock in 2001 as the company plunged toward bankruptcy,
reported the newswire.
Genuity And Level 3 to Convene Sale Hearing
In accordance with the bidding procedures for its proposed acquisition
by Level 3 Communications Inc. and the chapter 11 process, Genuity
Inc.'s board has determined that there are no new bids for the purchase
of Genuity's assets that meet the required criteria, Dow Jones reported.
As a result, Genuity and Level 3 will move forward to complete the
acquisition process with a sale hearing on Jan. 21, Genuity said in a
news release.
According to Genuity, last November, it and Level 3 announced a
definitive agreement pursuant to which Level 3 would acquire
substantially all of Genuity's assets and operations for $242 million,
subject to adjustments, and assume a significant portion of Genuity's
existing long-term operating agreements, according to Genuity, reported
the newswire. To facilitate the transaction, Genuity and some of its
subsidiaries filed voluntary petitions for reorganization under chapter
11 of the Bankruptcy Code. In conjunction with the filing, Genuity
established bidding procedures and scheduled an auction to allow other
qualified bidders to submit better offers for its assets, reported the
newswire.
Wade Cook Creditors Petition to Force Company Into Bankruptcy
Wade Cook Financial Corp.'s former audit committee chairwoman and two
other creditors filed a court petition seeking to force the money-losing
stock market seminar company into bankruptcy, Bloomberg News reported.
The bankruptcy petition, filed on Thursday, alleges the company recently
paid $125,000 to founder and chief executive Wade Cook, as employees,
payroll taxes and employee insurance premiums went unpaid. The petition
asks the U.S. Bankruptcy Court in Seattle to order the company into
chapter 7 bankruptcy and appoint a trustee to take possession of the
company, reported the newswire. The company lost $6.2 million in the
first nine months of the year, according to a filing with the Securities
and Exchange Commission.
Court Approves Horizon Natural Employee Retention Plan
A bankruptcy court authorized Horizon Natural Resources Co. to implement
a multimillion-dollar employee compensation plan, Dow Jones reported.
Judge William S. Howard of the U.S. Bankruptcy Court in Ashland, Ky.,
signed an order on Wednesday to approve a proposed plan with some
modifications. The retention program 'is designed to mitigate the
potential turnover of key management personnel' and ensure the success
of the business, Horizon Natural Resources said in a Nov. 18 motion.
Current senior managers are 'integral' to the firm's five-year plan, the
motion said. When coal producer Horizon Natural Resources filed for
bankruptcy protection on Nov. 13, it had more than 3,700 workers. The
approved compensation plan applies to 63 employees, reported the
newswire.
Court Grants Request for Examiner in NewPower Chapter 11 Case
A bankruptcy judge granted a U.S. trustee's request and appointed an
examiner to investigate claims of insider transactions in NewPower
Holdings Inc.'s chapter 11 case, according to court papers Dow Jones
Newswires recently obtained. Judge W. Homer Drake Jr. of the U.S.
Bankruptcy Court in Newnan, Ga., signed an order on Monday that
authorized the appointment, according to the newswire. The U.S.
Trustee's motion, filed on Dec. 2, said the trustee believes an examiner
is needed to investigate and possibly void, as well as recover, improper
or otherwise voidable transfers to company insiders, including any
improper compensation arrangements, reported the newswire.
The motion said that if needed, the examiner also would object to
insider claims filed in the cases of NewPower Holdings and subsidiary
TNPC Holdings Inc. The U.S. trustee said the scope of the proposed
examiner would exclude insider claims of Enron Corp. and its affiliates
because NewPower's unsecured creditors' committee already has reviewed
those claims, reported the newswire. Enron started Purchase, N.Y.-based
NewPower, in an attempt to revolutionize the retail energy business. The
company provides electricity and natural gas to residential and small
commercial customers in markets that have been deregulated to permit
retail competition, Dow Jones reported.
Honeywell Settles with Narco Claimants over Asbestos
Honeywell International Inc. said it reached an agreement with about 90
percent of the asbestos claimants from a former unit, paving the way for
the end of similar potential lawsuits, Bloomberg News reported.
Honeywell and its former North American Refractories Co. unit reached an
agreement with 236,000 claimants, which allows for the creation of a
trust to pay asbestos-related settlements. The trust calls for claimants
to be paid within four years and caps the amount of future claims,
Honeywell said in a statement, reported the newswire.
KMART
Kmart Demands Executives Repay Loans, Fires Five More
Kmart Corp. demanded the repayment of all executive retention loans made
before the discount retailer filed for bankruptcy protection and fired
the five remaining recipients of the bonuses still with the company,
Bloomberg News reported. An internal investigation found that management
under former Chairman Charles Conaway didn't properly disclose
information with the board when it set up the loan program in 2001,
Kmart said in the statement. The retailer loaned more than $30 million
to dozens of executives in the year before the January 2001 bankruptcy
filing, reported the newswire.
Kmart Promotes President Julian C. Day to CEO
Kmart Corp. named President Julian C. Day to the additional post of
chief executive, replacing James B. Adamson, effective immediately, Dow
Jones reported. Adamson, who became chief executive in March, will be
Kmart's non-executive chairman through the final stages of its
bankruptcy reorganization, the retailer said in a press release on
Sunday. Kmart said 'the timing of this planned announcement was designed
to afford Day adequate time to select additional key executives for
Kmart's emergence team, including a chief merchant and general counsel,'
as well as permanent finance leadership to succeed the interim services
from principals of AlixPartners, reported the newswire.
NHL Gives Hamister Third Extension to Purchase Buffalo Sabres
The National Hockey League gave a group led by Arena Football League
team owner Mark Hamister a third one-week extension until Jan. 24 to
complete its purchase of the Buffalo Sabres, who filed for bankruptcy
protection last week, Bloomberg News reported. The league granted
Hamister and Chartwell Investments President Todd Berman, who bid $40.7
million for the team contingent on government aid, additional time as
talks continue with state, county and city officials. The league said it
expects the purchase of the team to be completed by this Friday,
reported the newswire.
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