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September 10, 2003
House Moves to Prevent Proposed Pension Rules
The House passed an amendment that could prevent the Treasury from
issuing controversial pension regulations, the Wall Street
Journal reported. Rep. Bernie Sanders, a Vermont independent,
offered the amendment, which was attached to an appropriations bill, to
stop the Treasury from issuing final regulations on cash-balance pension
plans, the online newspaper reported. Cash-balance plans are
controversial because they usually cut pensions for older workers. The
vote passed 258 to 160, with 65 Republicans and 192 Democrats in
favor.
Although the final regulations haven't been issued, the Treasury is
widely viewed as sympathetic to employers in pension matters, and in
December issued proposed regulations that said cash-balance plans
wouldn't be subject to age-discrimination rules. Hundreds of large
employers have adopted cash-balance plans, which usually save companies
money by cutting pensions for older workers, and indirectly boost
earnings by cutting pension liabilities, reported the online
newspaper.
Sen. Hatch Asks Companies to Work on Asbestos Bill
Sen. Orrin Hatch (R-Utah) said on Tuesday he had asked insurers and
asbestos companies to try to reach a deal that could help rescue the
measure, Reuters reported. Hatch said Senate Republican Leader Bill
Frist (R-Tenn.) had agreed to bring the asbestos proposal up for a vote
this autumn, but Hatch is hoping to firm up the weak support for the
bill before it comes to the Senate floor. 'I've asked the insurers and
companies to get together and see what they can do,' he told reporters
on Capitol Hill, the newswire reported. 'I intend to push the bill as it
is unless they can come up with some accommodations.'
Hatch's bill, which passed the Judiciary Committee in July on a near
party-line vote, would end asbestos lawsuits and instead compensate
people sickened by the mineral from a trust funded supported by business
and insurers.
But insurers say they are being asked to pay too much into the proposed
trust fund, and Republican support for the measure is eroding as a
result. Asked if the funding could be rearranged to accommodate the
insurers, Hatch replied, 'I'm working on a whole bunch of
possibilities,' Reuters reported. He said he is also trying to address
the concerns of Democrats who say the fund's payouts to victims are too
low. But he did not believe he could increase the overall size of the
proposed fund, which he said was between $108 billion and $139 billion.
Spokesmen for business and insurers said they had no details of any
talks, but were happy to keep pursuing a solution, in hopes of ending
asbestos-related lawsuits, reported the newswire.
FTC Emphasizes Fair Credit Proposals As Debate Nears
As the House geared up for today's expected floor debate of legislation
reauthorizing the Fair Credit Reporting Act, Federal Trade Commission
(FTC) officials briefed reporters on Tuesday on the commission's
recommendations for amending the 33-year-old law, CongressDaily
reported. Most of those recommendations are reflected in the House bill,
including an expanded 'notice' requirement regarding the use of
consumers' credit reports. 'The notice mechanism is among the
improvements most needed,' said Howard Beales, director of the FTC's
consumer protection bureau. Current law requires financial institutions
to notify consumers if they deny them credit based on information
obtained from credit reporting agencies. But Beales said those
institutions are not required to notify consumers if, based on credit
reporting information, they offer a consumer credit, but not 'on the
best terms' -- such as low interest rates.
The FTC also has urged Congress to make it easier for consumers to
opt out of receiving prescreened offers of credit. 'You can opt out of
receiving those offers, but most people don't know how,' Beales said,
reported the newswire. He said Congress also should enact a standardized
system, included in the House bill, of 'fraud alerts' to protect
identity theft victims by preventing new credit accounts from being
fraudulently established in their names. But Beales said the FTC opposes
a provision in the House bill that would toughen 'furnisher liability'
for financial institutions that provide credit reporting agencies with
inaccurate consumer information. 'We are concerned about the possibility
that you would push the furnishers out of the [credit reporting] system
entirely,' Beales said 'It's a voluntary system, and there are limits,
in a voluntary system, to what you can require people to do,' reported
the newswire.
Judge OKs Conseco Bankruptcy Exit Plan
A federal judge on Tuesday approved Conseco Inc.'s bankruptcy exit plan,
freeing the company to emerge from court protection within days as an
insurance-only operation, Reuters reported. Carmel, Ind.-based Conseco
in December filed the third-largest bankruptcy in U.S. history after
rapid expansion into the high-risk-loans business saddled it with too
much debt. The plan cuts debt and preferred securities obligations from
about $6.5 billion to about $1.3 billion, reported the newswire.
PG&E's Utility Settlement Opposed by San Francisco
PG&E Corp.'s plan to bring its Pacific Gas & Electric unit out
of bankruptcy overcharges customers $9 billion, said consumer groups and
an attorney for the city of San Francisco, Bloomberg News reported.
PG&E reached an agreement with California regulators to repay
creditors owed $13 billion with money raised from bond sales and
collected from customers rather than through issuing new stock. Dividend
payments, suspended in 2000, would be restored by mid-2004 at the
earliest and customer rates could drop next year.
The Utility Reform Network and Consumer's Union, two public interest
groups, and the San Francisco city attorney proposed to raise money
through asset-backed securities that they say would guarantee a rate cut
and save customers $2.8 billion in interest, tax and dividend payments.
Ron Low, Pacific Gas spokesman, said the proposal would delay the
resolution of the bankruptcy case by up to a year and cost customers
$1.6 billion over nine years, reported the newswire.
CIBC Loses $52 Million Verdict Over Cosmetics Company
Bonds
Canadian Imperial Bank of Commerce was told by a jury to pay $52 million
to three money managers who accused the bank of hiding information when
selling $200 million in bonds for a cosmetics company that went
bankrupt, Bloomberg News reported. A Los Angeles County Superior Court
jury awarded $52 million in damages to TCW Group Inc., Pacholder
Associates Inc. and Oaktree Capital Management LLC. 'I think this may be
the first time a distressed bond dealer has successfully sued an
underwriter and we're gratified for the precedent,'' said Michael
Hennigan, who represented the three money managers, reported the
newswire.
Oakwood Homes Files Revised Reorganization Plan
Oakwood Homes Corp. said it has filed a revised plan to emerge from
bankruptcy protection by the end of November, Bloomberg News reported.
The plan calls for unsecured creditors to convert their claims into
common stock, the company said in a statement distributed by PR
Newswire. The Greensboro, N.C.-based company filed the revised plan in
U.S. Bankruptcy Court in Delaware. Berkshire Hathaway, Greenwich Capital
Financial Products Inc. and Ranch Capital LLC agreed to lend Oakwood
$215 million to finance operations during its reorganization.
Oakwood filed for bankruptcy protection in November 2002, citing
slumping mobile home sales, an increase in bad loans and a reduction in
loans from Conseco Inc., Greenpoint Financial Corp. and other lenders.
Berkshire Hathaway will become Oakwood's largest shareholder when it
emerges from bankruptcy, the company said, reported the newswire.
Enron Probe Focusing On Executives' Motives
A Justice Department task force is preparing a critical new phase of its
criminal investigation of Enron Corp., focusing on whether former
executives of the Houston energy trader manipulated its profits to
inflate the company's stock price and deceive investors, according to
people close to the case, the Washington Post reported.
Prosecutors expect to gain another guilty plea today, when former Enron
Treasurer Ben F. Glisan Jr. appears in Houston's federal court, lawyers
in the case said. Glisan was indicted in May on securities fraud and
other charges, and he pleaded not guilty. But his attorney has been
negotiating a change of plea with federal prosecutors. He would be the
fifth, and highest-ranking, former Enron employee to admit wrongdoing,
reported the Post.
Spiegel Hires Firm to Seek Buyer for Newport News
Spiegel Group, which operates a catalog business and the Eddie Bauer
clothing stores, said on Tuesday it has hired a firm to seek a buyer for
its Newport News division as it reorganizes under bankruptcy protection,
Reuters reported. The company said it has hired bankruptcy advisers
Miller Buckfire Lewis Ying & Co. to solicit parties who may be
interested in acquiring Newport News, which sells women's fashions on
the web and through catalogs.
'We will evaluate the level of interest, taking it into consideration as
we work to develop a plan of reorganization,' Bill Kosturos, interim CEO
and CRO of Spiegel, said in a news release. Spiegel filed for chapter 11
bankruptcy protection in March. In April it said it would close 60
underperforming Eddie Bauer stores and also said it would close all 21
of its Spiegel and Newport News outlet and clearance stores, reported
the newswire.
UNITED AIRLINES
UAL Requests More Time to File Restructuring Plan
Bankrupt UAL Corp., parent of United Airlines, has filed court papers to
extend until April the period in which it has exclusive rights to file
its reorganization plan, Reuters reported. The airline is seeking to
extend the exclusive period by six months to April 6 'to avoid premature
formulation of a chapter 11 plan,' the carrier said in court documents.
After the period ends, other competing plans from creditors could be
filed. In March, the company received court permission to extend the
exclusive period until Oct. 6.
United has said it is on track to cut expenses by $5 billion a year. But
the carrier still needs to resolve a number of issues, including
adjustments to its cost and capital structure and contributions to its
pension plans. The company also needs to finalize its business plan and
secure exit financing, reported the newswire. Other issues that remain
outstanding are municipal bond litigation and the uncertainty regarding
United's business relationship with regional carrier Atlantic Coast
Airlines, as well as the rejection of various aircraft leases under
Section 1110 of the Bankruptcy Code. UAL bankruptcy attorney James
Sprayregen had said at a court hearing last month that the company
was preparing to seek an extension to the exclusive period, reported the
newswire.
United Airlines to Appeal Sept. 11 Ruling
United Airlines, like American Airlines, said on Tuesday it hopes to
immediately appeal to the Second Circuit Court of Appeals an earlier
federal court ruling that allows families of people who died in the
Sept. 11 attacks to proceed with lawsuits against the airlines, Reuters
reported. 'While United Airlines does not believe that it was our legal
responsibility to protect the ground victims of these attacks, that does
not leave the families of those who lost their lives that day without a
remedy,' it said. 'Those families can make claims for compensation from
the Victim's Compensation Fund.' The company called the judge's ruling
procedural, not reflective of the merits of the claims and said it will
ask him to certify the ruling for immediate appeal, reported the
newswire.
UAL Corp. Seeks Court Approval Of Fuel Supply Agreement
UAL Corp., the parent of United Airlines, is seeking bankruptcy
court approval of a jet fuel supply agreement with a unit of Morgan
Stanley, according to court papers.
In a motion filed in bankruptcy court late Monday, UAL said the proposed
fuel supply pact would call for Morgan Stanley Capital Group Inc. to
supply 100 percent of the airline's fuel requirements at 35 selected
airports in the United States. At some airports, Morgan Stanley Capital
Group would perform all pipeline supply requirements at cost, take on
the carrier's local supply contracts and resell the fuel at cost. Also,
the motion said, the Morgan Stanley subsidiary would finance all
third-party fuel sales and handle all fuel trades.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Communication Dynamics, Inc. Receives Court Approval to Sell
Assets
Communication Dynamics Inc. (CDI), parent company of TVC Communications
Inc., yesterday announced in a press release that it has received
approval from the United States Bankruptcy Court for the District of
Delaware to sell substantially all of its assets to TVC Holding Inc., a
designee of Palisades Associates Inc. The court also approved the sale
of CDI's remaining assets to Power & Telephone Supply Company
(PTSC). The sale transactions are subject to certain closing conditions
and are expected to be completed by the end of the month.
Eye Surgery Equipment Maker LaserSight Blames Bankruptcy Filing on
Cash Flow
Eye surgery equipment maker LaserSight Inc. filed for federal bankruptcy
protection on Friday, the Orlando Sentinel reported. In a
prepared statement, the company blamed 'continued cash flow issues' for
its decision to seek chapter 11 protection in the U.S. Bankruptcy Court
in Orlando. The filing came a day after the company announced that it
hadn't yet submitted its quarterly financial results to the U.S.
Securities and Exchange Commission. LaserSight's stock price fell 9
cents a share, or 60 percent, to close at 6 cents a share Friday.
LaserSight has struggled with losses for more than three years and had
an accumulated debt of more than $101 million at the end of March,
reported the newspaper.
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