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Bankruptcy Bill's Progress Is Mostly in Battle Fatigue
The American Banker reported that most supporters of
bankruptcy reform legislation acknowledge that they are discouraged and
may ultimately withdraw after spending six years pushing the bill that
would help financial companies recoup more unsecured debt. According to
the online news service, not only does the measure have a history of
collapsing just as the battle seemed won each congressional term, but it
has lost some of its appeal to financial services industry executives
over the years as lawmakers have kept narrowing the number of debtors
who would be forced into repayment plans. Still, the most ardent
congressional and industry supporters are working to craft a strategy to
overcome the parliamentary obstacles that have tripped up the bill,
reported the Banker. Ideas include bypassing committee action in
the Senate and attaching the bill to an appropriations or other must-do
bill to get the 60 votes necessary to prevent procedural stalling
tactics. To read the full article, point your browser to
href='http://www.americanbanker.com/'>http://www.americanbanker.com
(subscription required).
Senate Refuses To Ease US Airways Pension Liability
The Senate on Wednesday rejected legislation intended to give
financially strapped US Airways Group Inc. an extra 25 years to fund its
accrued pension liabilities, Dow Jones reported. The provision, offered
as an amendment to a $385 billion omnibus spending bill, failed on a
64-to-31 vote. The airline has been trying to secure a $1 billion loan
from the Air Transportation Stabilization Board. The ATSB, however, is
requiring the airline to develop a viable business plan for the next
seven years, a hurdle US Airways cannot surmount given its sizable
pension liabilities.
Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) opposes
the legislation, arguing that it would 'create as a matter of substance
perverse disincentives for all plans that paid premiums [to] the Pension
Benefit Guarantee Corporation' by singling out one corporation to exempt
from pension funding rules. Finance Committee ranking Democrat Sen. Max
Baucus (D- Mont.) said the plan has 'serious deficiencies' in that it
applies to only one airline, reported the newswire.' It's unfair to
other airlines,' Baucus said. 'We should have more time to determine the
right way to treat all airlines .'
SEC Approves Rules That Require Companies to Disclose Off-books
Debt
The Securities and Exchange Commission approved rules requiring U.S.
companies to
disclose an estimated $3 trillion in off-balance-sheet debt, a reaction
to hidden losses that led to Enron Corp.'s bankruptcy, Bloomberg News
reported. The rule, required by a new U.S. corporate-governance law,
will affect General Electric Co., General Motors Corp., Citigroup Inc.
and thousands of other companies that set up special-purpose entities
(SPEs) for some corporate operations. These SPEs help corporations get
more favorable terms on loans while keeping the debt off their books,
reported the newswire. The SEC rule also requires companies to present
tables outlining when their obligations -- including debt, leases, lines
of credit and guarantees -- mature over various time periods. Companies
have about $3 trillion debt and other obligations in SPEs, which are
usually partnerships, trusts or corporations, according to an SEC
estimate, Bloomberg reported.
Coram Healthcare Equity Panel Calls For CEO's Ouster
The equity committee in bankruptcy proceedings for Coram Healthcare
Corp. has asked a court to remove the company's chief executive,
claiming he has failed to lead the company properly, according to court
documents obtained Wednesday by Dow Jones Newswires. The 21-page motion
filed by the committee chronicles a series of events involving Chief
Executive Daniel Crowley and alleges that Crowley's legal obligations to
the company have been compromised. Coram Healthcare has been under
chapter 11 protection since August 2000. A hearing on this issue has
been scheduled for Jan. 29 in the U.S. Bankruptcy Court in Wilmington,
Del., reported the newswire.
No Deal In NRG, Executive Talks Ahead Of Court Conference
NRG Energy Inc. hasn't reached a settlement with former executives that
are trying to force bankruptcy at the troubled power generator, and a
deal isn't anticipated ahead of a court conference on the matter today,
a lawyer for the executives said late on Wednesday, Dow Jones reported.
The Xcel Energy Inc. subsidiary has made recent overtures towards a
deal, but the seven former workers, including former NRG Chief Executive
David Peterson, are still pushing for bankruptcy, said Bill O'Brien, a
lawyer representing the executives. 'There really is no progress on
that, nor are we really expecting any,' O'Brien said, Dow Jones
reported. A bankruptcy court status conference will be held in St. Paul,
Minn., early today. Chief Judge Gregory F. Kishel is expected to set a
schedule for key matters in the case.
WorldCom Seeks To End Adelphia Circuit Pact
WorldCom Inc. has decided to reject agreements with Adelphia
Communications Corp. or its former telecommunications unit for the use
of 1,169 circuits, according to court documents, Dow Jones reported.
WorldCom said it has rerouted traffic previously on the circuits and it
will save $4.3 million a year by rejecting the Adelphia agreement,
according to the court papers. WorldCom added that the move won't
prejudice Adelphia Communications, its former telecommunications unit
Adelphia Business Solutions Inc. or their creditors because they will
recover their capacity to sell to other customers, reported the
newswire.
All three companies are under chapter 11 bankruptcy protection in the
U.S. Bankruptcy Court in Manhattan. Adelphia Business has been in
chapter 11 bankruptcy since March 2002, Adelphia Communications since
June and WorldCom since July.
IT Group Seeks Court OK For Chapter 11 Plan Filing Extension
IT Group Inc. is asking a bankruptcy court for a 90-day extension of its
exclusive periods to file a reorganization plan and to solicit support
for the plan, according to court filings obtained on Wednesday by Dow
Jones Newswires. The company is seeking to extend the deadline to file
the reorganization plan until April 14 and the deadline to solicit votes
until May 12. IT Group said it should be granted additional time to
negotiate the final terms of its chapter 11 plan with its unsecured
creditors' committee and pre-petition lenders without the distraction
and expense of competing plans, the court documents said, Dow Jones
reported.
J.P. Morgan Has $387 Million 4th-Qtr Loss on Enron Suit
J.P. Morgan Chase & Co. lost $387 million in the fourth quarter
after the second-biggest U.S. bank wrote off losses related to bankrupt
energy trader Enron Corp. and set aside money to cover the cost of
lawsuits, Bloomberg News reported. The bank's second loss in five
quarters shows that Chief Executive William Harrison's strategy of
financing some of the fastest-growing energy and telecommunications
companies in the 1990s has backfired. The bank has had only one quarter
of rising profit since it was formed two years ago by the merger of
Harrison's Chase Manhattan Corp. with J.P. Morgan & Co., Bloomberg
reported.
RMS Titanic Asks Attorneys About Possible Bankruptcy
RMS Titanic Inc. said it has consulted with bankruptcy attorneys 'to
determine if a beneficial result can be achieved should the company seek
to utilize a bankruptcy action,' Dow Jones reported. According to RMS
Titanic's report for the quarter ended Nov. 30, 2002, filed on Wednesday
with the Securities and Exchange Commission, there is great uncertainty
about the outcome of the company's pending lawsuit seeking a salvage
award for the items recovered from the Titanic wreck. The company said
that its counsel has indicated that the amount of time needed to seek a
salvage award is uncertain and there is 'substantial uncertainty' about
the amount or appropriateness of an award, if there is one. If RMS
Titanic receives an adverse ruling in the lawsuit and if it's without
additional sources of revenue, it may be forced to file for bankruptcy,
the filing said, reported the newswire.
Telscape Wins Court Approval to Sell Telereunion Business
A bankruptcy court has approved the sale of Telscape International
Inc.'s Telereunion business to pay off Telscape's creditors, Dow Jones
reported. Telereunion business operates a fiber-optic network and
provides telecommunications capacity and other services in Mexico and
the United States, according to court documents, reported the newswire.
Lambco Telecommunications U.S.A. Inc. was listed as the sole buyer.
Under the sale agreement, Lambco will pay $18.75 million for the
property, according to the ruling Jan. 14 by Judge Mary F. Walrath of
the U.S. Bankruptcy Court in Wilmington, Del. The U.S. Trustee assigned
to Telscape's chapter 11 case filed a motion on Nov. 12, 2002, seeking
court approval to sell the company's assets to pay off creditors. Court
papers said Telereunion's shareholders in Mexico agreed to give up their
interests in the business to allow the assets to be sold, Dow Jones
reported.
AT&T Canada Files Reorganization Plan With Ontario Court
AT&T Canada Inc. filed a plan to reorganize itself as a new company
worth as much as C$873.4 million ($569 million), about one-tenth the
amount that AT&T Corp.
of the United States spent to create it, Bloomberg News reported.
AT&T Canada, the biggest rival to the country's former regional
telephone monopolies, filed for bankruptcy protection in October after
racking up C$4.5 billion in debt. New York-based AT&T Corp. agreed
in October to hand over ownership of AT&T Canada to bondholders,
Bloomberg reported.
Court OKs Digital Teleport Auction Sale, Bidding Process
Digital Teleport Inc. received bankruptcy court approval for the company
to be auctioned to the highest bidder, Dow Jones reported. In a press
release on Wednesday, Digital Teleport said it has already received a
$38 million definitive bid from CenturyTel Inc., the country's
eighth-largest telephone company based on access lines. The U.S.
Bankruptcy Court for the Eastern District of Missouri set the auction
date for Feb. 10. Digital Teleport, which provides wholesale fiber optic
transport and Ethernet services in the Midwest, filed for chapter 11
bankruptcy on Dec. 31, 2001, with plans to exit its long-haul business
and focus on its core fiber optic network, Dow Jones reported.
Interliant Seeks Second Extension To File Reorganization Plan
Interliant Inc. is asking a bankruptcy court to extend the time in which
the company has the sole right to file a chapter 11 plan and solicit the
plan's acceptance, Dow Jones reported. This is the second time that the
company is seeking to extend its exclusive periods. According to a
motion Dow Jones Newswires recently obtained, Interliant is seeking a
45-day extension, through March 20, to file the plan, reported the
newswire. If it files a plan by that date, other parties would be
prohibited from filing competing plans through May 19, while the company
collects votes for the plan from creditors.
On Nov. 20, 2002, Judge Adlai S. Hardin granted a first extension, under
which Interliant's exclusive periods were set to expire Feb. 3 and April
4. The company said in its motion that since that court order it has
continued efforts to reduce costs and sell assets that aren't a part of
the core business, Dow Jones reported. The U.S. Bankruptcy Court in
White Plains, N.Y., has scheduled a hearing for Jan. 30 on the proposed
extension.
Court OKs Galey & Lord Plan To Distribute Stock Proceeds
A bankruptcy court approved a request from textile manufacturer Galey
& Lord Inc. to distribute stock proceeds to members of the company's
employee health plan, Dow Jones reported. According to court papers, the
U.S. Bankruptcy Court in Manhattan on Jan. 16 authorized the company to
convert shares of Prudential Financial Inc. stock to cash and divide the
proceeds between the company and health plan participants. Galey &
Lord has been under chapter 11 protection since Feb. 19, 2002, reported
the newswire. Court papers said the stocks came from Prudential's recent
change from a mutual life insurance company to a stock life insurance
company through a process called demutualization. When Galey & Lord
and 11 units filed for chapter 11 protection, they listed total assets
of $694.4 million and $715.1 million in liabilities as of Dec. 29, 2001,
Dow Jones reported.
Kmart Reported To Be Laying Off 400-600 More Workers
Kmart Corp. may let go another 400-600 workers at its Troy, Mich.-based
headquarters, according to a report in the Detroit News, Dow Jones
reported. The company, which is reorganizing under chapter 11 bankruptcy
protection, laid off 400 headquarters jobs in August. Last week, the
company said it planned to close another 325 stores and is closing a
distribution center in Texas, affecting 37,000 employees. Kmart is
expected to emerge from bankruptcy protection in April.
Separately, Dow Jones reported that Kmart Corp. will pay new Chief
Executive Julian Day $1 million when the company emerges from chapter
11, according to an amended employment agreement. The new CEO's base
salary will also be $1 million, according to the agreement, which was
attached to a Form 8-K filed on Wednesday with the Securities and
Exchange Commission.
Conseco Judge OKs Amended Order Limiting Equity Trading
The judge overseeing Conseco Inc.'s bankruptcy proceedings here issued
an amended final order limiting certain types of trading in the
company's equity securities, according to court documents made available
electronically on Wednesday, Dow Jones reported. Conseco said in its
motion that unrestricted trading in the company's equity securities
without appropriate insurance regulatory approval could cause violations
of state insurance holding company statutes.
According to the order, substantial equity holders must notify the
company and the court of their position and intent, if any, to sell or
buy securities. Conseco then would have 15 days to respond with an
objection, if necessary. Judge Carol A. Doyle signed the amended order
on Tuesday, reported the newswire. Meanwhile, Conseco said in a press
release late Tuesday that it planned to file its reorganization plan to
the court by Jan. 31. The company, which filed for federal
bankruptcy-court protection on Dec. 17, said it is currently in the
'final stages' of drafting the plan.
WilTel Signs Capacity Deal
WilTel Communications Group Inc. received the largest commercial network
capacity agreement in its history from SBC Internet Services, a unit of
SBC Communications Inc., Dow Jones reported. In a press release on
Wednesday, WilTel said it agreed to provide SBC with
10-gigabits-per-second OC-192c transport, which SBC needs to expand its
national Internet-protocol network. WilTel plans to activate the network
within 75 days. WilTel, a spinoff of Williams Cos., was known as
Williams Communications Group Inc. before it emerged from chapter 11
bankruptcy in October, the newswire reported.
AMR Down Sharply For 2nd Day On Bankruptcy Concerns
Shares of American Airlines parent AMR Corp. plunged for the second
straight day on Wednesday amid worries the owner of the world's largest
carrier might follow UAL Corp.'s United Airlines and US Airways Group
Inc. into bankruptcy amid what's turned out to be the industry's deepest
slump since World War II, Dow Jones reported. Quoting sources familiar
with the matter, Reuters reported on Tuesday that AMR retained lawyers
Marcia Goldstein and Martin Bienenstock at its longtime legal adviser
Weil Gotshal & Manges LLP in New York.
AMR spokeswoman Tara Baten wouldn't confirm or deny the report, saying
only that 'with a third of major airlines in bankruptcy and the
continued weak economic climate and the prospect of war with Iraq, it
would be imprudent of any airline not to explore all of its options,'
reported the newswire.
Alterra Healthcare Files for Chapter 11 Bankruptcy Protection
Alterra Healthcare Corp., the largest U.S. operator of residences
offering care for Alzheimer's patients, filed for bankruptcy protection,
reported Bloomberg News. The Milwaukee, Wis.-based company listed assets
of $735.8 million and debt of $1.17 billion in its chapter 11 petition
filed in the U.S. Bankruptcy Court in Wilmington, Del. Alterra has
closed 100 residences since 2001 as it restructured its debt, the
newswire reported. The chapter 11 filing will allow it to continue that
restructuring, the company said in a statement. Shares of Alterra, which
operates in 24 states, fell one cent to 11 cents in American Stock
Exchange trading. The shares traded as high as $35 in April 1998.
Farmland Seeks Value of Meat Business, Prospects for Asset
Sale
Farmland Industries Inc. asked a bankruptcy court judge to approve the
hiring of an investment bank to determine the value of Farmland's meat
business and the prospects for a sale of the unit, Bloomberg News
reported. The largest U.S. farm cooperative wants to hire Goldsmith,
Agio, Helms & Lynner LLC to assess the beef- and pork-processing
plants, which were profitable in the first quarter of 2003, according to
a filing with the court. U.S. Bankruptcy Judge Jerry Venters will decide
the request on Jan. 28, Farmland lawyer Laurence M. Frazen said,
the newswire reported.
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