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April 3, 2006
New
Bankruptcy Law Puts Debt Agencies in a Bind
While lenders hoped the
credit counseling requirement of the new bankruptcy law would persuade
some borrowers not to file bankruptcy, many credit counseling agencies
are finding that the counseling sessions aren't changing anybody's mind
about filing, and that the required counseling is putting the
agencies in a financial bind, the
size='3'>Seattle Times reported yesterday.
Credit counseling agencies say they bring in a significant portion of
their revenue from debt-management plans but lose money on each
pre-bankruptcy counseling session. One state agency figures it costs
$133 for a 90-minute counseling session, but it collects about $36.
Costs are lower for agencies that do part of the counseling by Internet.
Almost all of the roughly 99,000 people who have gone for
pre-bankruptcy counseling since October have headed into bankruptcy.
Agencies say they can't afford the wave of new clients long-term unless
more people sign up for debt-management plans or the agencies find
another source of income. 'We basically tripled our workload,' said
Suzanne Boas, president of the Consumer Credit Counseling Service of
Greater Atlanta.
href='http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2002…'>Read
more.
w:st='on'>
name='2'>Albany
face='Times



New
Roman' size='3'> Bankruptcy Filings Down Drastically in First
Quarter of 2006
Changes last year that
make it harder for consumers to shed their debt slowed the tide of
bankruptcy filings this year as the U.S. Bankruptcy Court in Albany,
N.Y., recorded just 695 filings through the close of the first
quarter, the Albany
Times-Union reported on Saturday. In the same
quarter last year, more than 2,146 individuals and businesses had filed.
'So many people filed before October, so that took the air out of the
balloon,' said
face='Times New Roman' size='3'>Albany
attorney Richard Croak, who handles
mostly consumer cases. Interest rates have been climbing, which could
lead to filings picking up later in the year.
size='3'>'If more money is going to mortgage payments, there's less for
credit cards,' said
size='3'>Samuel Gerdano, executive director of
the American Bankruptcy Institute. 'There's a strain.' For all of last
year, 10,431 petitions were filed with the court in
w:st='on'>
size='3'>Albany
with 8,326 the year before.
href='http://timesunion.com/AspStories/storyprint.asp?StoryID=467131'>Read
more.
Autos
name='3'>Delphi Moves to Break Its Union
Deals
Delphi, the nation's
biggest auto parts maker, on Friday asked a federal judge for permission
to throw out some of its labor agreements, a move that could cost 20,000
union workers their jobs and leave thousands of others with less than
half their current wages, the
size='3'>New York Times reported on
Saturday.
size='3'>Delphi
bankruptcy, wants the judge's permission to impose sharply lower wages
and benefits on six unions, setting up a confrontation that its largest
union, the United Automobile Workers, said could lead to a lengthy
strike. Delphi said it would close or sell all but eight of its 29
plants in the
w:st='on'>United
States
28,500 positions around the world. Beyond the 20,000 of its 33,100
hourly jobs in the
face='Times New Roman' size='3'>United
States
w:st='on'>Delphi
worldwide are to be eliminated.
href='http://www.nytimes.com/2006/04/01/business/01delphi.html?pagewanted=pri…'>Read
more.
In related news, the UAW
warned that if the court voids its contracts with
w:st='on'>
size='3'>Delphi
will be impossible to avoid a long strike,' the Wall Street
Journal reported on Saturday But some of
w:st='on'>
size='3'>Delphi
warned that they will fight any agreement with the unions that leaves
too little to repay debtholders. The bankruptcy judge has scheduled a
hearing for May 9 and 10, and the judge isn't likely to rule on the
motion on labor contracts until early to mid-June. Any official labor
action likely won't happen until then. Negotiations with
size='3'>Delphi
which represent about 33,000 hourly workers, will probably continue in
the meantime. Separately on Friday, a federal judge approved an
agreement between the UAW and GM that will require UAW-GM retirees to
pay more for their health care. The deal, negotiated last fall, is
projected to save GM as much as $1 billion a year.
href='http://online.wsj.com/article/SB114381492923813523-email.html'>Read
more. (Free registration required)
GM
Unveils Deal to Sell 51 Percent of GMAC to Cerberus
Group
General Motors Corp.
announced that it is selling a majority stake in its General Motors
Acceptance Corp. (GMAC) finance arm to a private investor group led by
Cerberus Capital Management, the Wall Street Journal reported today. GM
said it agreed to sell a 51 percent stake in GMAC to the investor group
for nearly $14 billion, payable over three years. Under the deal, the
auto maker said it will receive $7.4 billion in cash at the closing,
expected in the fourth quarter, plus an estimated $2.7 billion cash
distribution from GMAC related to the conversion of most of GMAC and
its
face='Times New Roman'
size='3'>U.S.
size='3'>units into limited-liability companies. The auto maker also
will receive an additional $4 billion over the next three years. The
additional money comes from the monetization of some assets over time
and through a series of adjustments that will transfer additional value
to GM from GMAC.
href='http://online.wsj.com/article/SB114406446238015171-email.html'>Read
more. (Free registration required)
name='5'>Asbestos Victims Seek Voice in Dana Case
Asbestos exposure victims
involved in the Dana Corp. bankruptcy proceedings are trying to secure a
spot on an official committee to best represent their interests in the
case, as an estimated $200 million in asbestos claims appears to be at
stake, Portfolio
Media reported on Friday. Angered that a U.S.
Trustee has yet to appoint them as an official committee, asbestos
claimants—comprising roughly 88,000 people—are seeking to be
represented as an ad hoc committee in an attempt to influence the course
of the insolvency proceedings in their favor. The trustee had recently
selected an appointee with a personal injury claim to the committee of
unsecured creditors instead of an official representative from the
claimant’s ad hoc committee. The ad hoc committee believes that
Dana may be understating the monetary value of the claims, and it wishes
to bolster its presence in the proceedings. Attorneys for the ad hoc
committee had lobbied unsuccessfully for representation in the matter at
a conference call with the trustee on March 20.
face='Times New Roman'>A hearing on the ad hoc
committee’s request is slated for April 19 at the U.S. Bankruptcy
Court in
face='Times New Roman'
size='3'>Manhattan
case is Dana
Corp., bankruptcy petition number
06-10354-brl, in the U.S. Bankruptcy Court for the Southern District of
New York.
Steel
Maker's Pension Plan to Continue
In a rare victory for the
federal pension insurance program, the government says it will stop
going after the assets of industrialist Ira L. Rennert because it has
been assured that Rennert will keep a disputed steelworkers' pension
plan going, the New York
Times reported on Saturday. Rennert's company,
the Renco Group, has owned the pension plan's sponsor, WCI Steel, since
1988. The steel company, based in
w:st='on'>
size='3'>Warren
w:st='on'>
size='3'>Ohio
bankrupt in 2003, and in the jockeying over who would bring it out of
bankruptcy, the pension fund seemed at risk of being abandoned. A group
of financiers who wanted to acquire the steel maker said they did not
want the pension plan and would leave it in an empty corporate shell.
Their reorganization plan, submitted to the U.S. Bankruptcy Court for
the Northern District of Ohio, in
w:st='on'>
size='3'>Akron
pension fund could be left in the empty shell because either Rennert or
the Pension Benefit Guaranty Corporation would eventually come to its
rescue. The plan covers about 2,000 workers and retirees. But the
government, fearing it was about to be stuck with tens of millions of
dollars in unfunded obligations, took the first steps of foreclosing on
Rennert's holdings in an effort to make him keep the plan and pay for
the pensions. This
week the pension guarantor said that it was dropping those proceedings
because it was now satisfied that the Renco Group would continue to
administer the pension plan and put money into it, even after Renco no
longer owned WCI Steel.
href='http://www.nytimes.com/2006/04/01/business/01pension.html?pagewanted=pr…'>Read
more.
Cable
Companies Formerly Owned by Adelphia Founder File for
Bankruptcy
A group of 21 cable
companies once owned by the family of Adelphia Communications Corp.
founder John Rigas filed for bankruptcy protection in
w:st='on'>
York
News reported yesterday. The companies, which serve 219,000 subscribers
in
size='3'>Florida
w:st='on'>
size='3'>Pennsylvania
Carolina
w:st='on'>
size='3'>Virginia
size='3'>Georgia
size='3'>California
bankruptcy as a step in their sale to Comcast Corp. and Time Warner
Inc., the two biggest
w:st='on'>
size='3'>U.S.
size='3'>cable companies. The planned sale is part of a larger $17.6
billion deal to sell most of Adelphia's assets to Comcast and Time
Warner. In papers filed with the bankruptcy court, the cable companies
asked U.S. Bankruptcy Judge Robert E. Gerber to
consolidate their cases with the main Adelphia bankruptcy, filed in
2002. The bankruptcy case is
size='3'>In re Adelphia Communications Corp.,
02-41729, U.S. Bankruptcy Court, Southern District of New York.
href='http://www.buffalonews.com/editorial/20060402/1006397.asp'>Read
more.
name='8'>Owens
face='Times New Roman' size='3'>Corning
Amends Reorganization Plan for Fifth
Time
Mapping out how it will
compensate creditors and asbestos personal-injury victims, Owens Corning
has filed a fifth amended version of its chapter 11 reorganization
plan, Portfolio
Media reported on Friday. The Ohio-based
fiberglass manufacturer is offering that lenders be paid post-petition
interest and fees on loans made to the company before it filed for
bankruptcy protection in 2000, according to details released in a U.S.
Securities and Exchange Commission filing on Wednesday. For the period
that ended March 31, Owens Corning plans to include additional expenses
between the range of $10 million and $15 million in regard to the
pre-bankruptcy credit facility from Oct. 5, 2000, when it filed for
bankruptcy, through Dec. 31, 2005. The
company also foresees taking on additional expenses that show the
treatment provided in the plan regarding the post-petition interest and
fees payable under the pre-bankruptcy credit facility. Its amended
plan’s disclosure statement has not been approved yet by the U.S.
Bankruptcy Court in
w:st='on'>
size='3'>Wilmington
w:st='on'>
size='3'>Del.
undergo further changes. The bankruptcy court action is
face='Times New Roman' size='3'>Owens Corning, A Delaware
Corporation, case no. 00-03837, in the
size='3'>U.S.
size='3'>Bankruptcy Court in the District of Delaware.
w:st='on'>
name='9'>Ohio
size='3'> Foundry Files for Bankrutpcy
Sandusky, Ohio-based
G&C Foundry Co. Ltd. filed for chapter 11 reorganization
in the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Toledo
Associated Press reported yesterday. The filing did not detail total
debts and assets, but indicated thatboth are between $1 million and $10
million. The firm’s list of its top 20 unsecured creditors totaled
$3.1 million, headed by Parker Hannifin Corp.,
w:st='on'>
size='3'>Elyria
Caterpillar World Trade Corp.,
face='Times New Roman' size='3'>Peoria
size='3'>,
size='3'>Ill.
Edison,
face='Times New Roman' size='3'>Akron
size='3'>, $309,000.
href='http://toledoblade.com/apps/pbcs.dll/article?AID=/20060401/BUSINESS06/6…'>Read
more.
name='10'>Ex-Nolan Supply Owners File for Bankruptcy
Brothers John Nolan and
Peter Nolan, the owners of the former Nolan Supply Corp. based in
size='3'>Syracuse
w:st='on'>
size='3'>N.Y.
for bankruptcy, the
size='3'>Syracuse Post-Standard reported on
Saturday. The major unsecured creditor listed in the bankruptcy
documents is the U.S. Small Business Administration (SBA). The amount
nearly matches a loan the company received in early 2002 as part of a
program to help businesses recover from the effects of the Sept. 11,
2001, terrorist attacks. Peter Nolan listed a $544,000 debt to the SBA.
Nolan Supply Corp. received a loan of $547,400 from the SBA's Expanded
Economic Injury Disaster Loan program.
href='http://www.syracuse.com/printer/printer.ssf?/base/business-2/1143885883…'>Read
more.
name='11'>New Panel in
w:st='on'>
size='3'>Montana
on State Pension System Issues
A new state panel will
meet for the first time Monday to begin improving communications among
the three boards that oversee the state pension systems, the Associated
Press reported yesterday. The Joint Issues Committee, created by the
governor's office, is comprised of two members each from the Board of
Investments, the Public Employees Retirement Board and the Teachers
Retirement Board. Unlike other states, where pension boards invest
retirement money and administer benefits, the state pension systems
in
size='3'>divide those duties. The boards of the two retirement systems
administer retirement benefits, while the Board of Investments is
charged with investing the money paid in. The state has projected a
$1.46 billion deficit in the pension systems and placed blame on a
number of factors, including the boards that manage the systems, stock
market losses and on the Legislature for increasing benefits when the
pensions were flush with investment gains.
href='http://www.billingsgazette.net/articles/2006/04/02/news/state/48-panel…'>Read
more.
International
name='12'>Stelco Out of Bankruptcy, but Still Faces Challenging
Future
Stelco's bankruptcy
proceedings ended Saturday when the company's bankruptcy-protection
order expired after more than two years, the Toronto Star reported on
Saturday. While a smaller and leaner company is emerging, Stelco still
faces a daunting future with the need for changes in labor relations and
a widely expected sale to a global steel giant and the ominous threat of
getting into trouble again. Many experts agree that how Stelco's future
unfolds depends on how quickly the steel maker's cost of production
problems are solved, especially at
w:st='on'>
size='3'>Hamilton
Works. Until those problems are solved, experts say, Stelco remains
vulnerable to declining world steel prices and the financial
difficulties of such major customers as General Motors Corp.
href='http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/…'>Read
more.
w:st='on'>
name='13'>Japan
face='Times New Roman' size='3'>'s Public Pension Becomes Independent,
Pledges Continuity
w:st='on'>
size='3'>Japan
public pension fund, the world's largest pool of retirement funds, will
keep the allocation of investments about the same after Prime Minister
Junichiro Koizumi gave the institution the freedom to make its own
decisions, Bloomberg News reported today. The Government Pension
Investment Fund, which will run about 151 trillion yen ($1.28 trillion)
of
face='Times New Roman'
size='3'>Japan
pension reserves in three years, on April 1 said it plans to invest 67
percent of funds in domestic bonds as of March 31, 2009, in line with
its estimate made last year. The fund has been mandated to make its own
investment decisions since April 1. Japan, which has the fastest-aging
population among major industrialized countries, is under pressure to
secure returns for pensioners that the government estimates will grow to
more than a quarter of Japan's population by 2025 from a fifth last
year. The fund, which was a part of the Ministry of Health, Labour and
Welfare until March 31, became an independent institution to manage and
invest public pension funds starting from April 1.
href='http:///'>Read more.