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March 21, 2007
w:st='on'>
size='3'>Brooklyn
face='Times New
Roman'
size='3'> Law
w:st='on'>
size='3'> School
15th Annual
Chief Judge Conrad B. Duberstein National Bankruptcy Memorial Moot Court
Competition
Brooklyn Law School won
the 15th Annual Chief Judge Conrad B. Duberstein National Bankruptcy
Memorial Moot Court Competition held in New York over March 17-19, the
second time that the school has won the competition.
w:st='on'>
size='3'>Brooklyn
face='Times New
Roman'
size='3'>Law
face='Times New
Roman'
size='3'>School
size='3'>’s Anna C. Burns and Robert J. Sitman overcame a tough
challenge from the runner-up team from Mississippi College of Law that
included Katie Childs, Whitney M. Adams and Michael J.
Bentley. The Best Brief award went to
Gregory M. Zarin and Jennifer D. Newberger of the University of Miami
School of Law and Sara M. Patterson of the South Texas College of Law
received the Best Advocate award. The competition, the nation's only
moot court competition devoted entirely to bankruptcy, is sponsored
jointly by the
w:st='on'>St.
John's
size='3'>University
w:st='on'>
size='3'>School
and the American Bankruptcy Institute. The ABI Endowment Fund provided
the first place team with $5,000, the second place team with $3,000, and
the two third place teams with $1,500, each. The Best Oralist and the
Best Brief each won $1,000.
Mortgages
name='1'>Senator Questions Regulators on Subprime Mortgage
Problems
As Congress continues to
look into the burgeoning crisis in the subprime mortgage lending
industry, Senate Banking Chairman Chris Dodd (D-Conn.) is asking federal
and state banking regulators why they were not more aware of problems
that have resulted in an increasing number of borrowers losing their
homes and cash-strapped lenders entering into bankruptcy,
CongressDaily
size='3'>reported today. Dodd wrote a letter Monday to Federal Reserve
Chairman Bernanke, Comptroller of the Currency John Dugan, FDIC
Chairwoman Shelia Bair and Office of Thrift Supervision Director John
Reich asking them to clarify what steps they took in response to current
problems in the subprime market. Dodd also sent a letter to the
Conference of State Bank Supervisors asking the group similar questions.
The questions Dodd said he wanted answered include: When did regulators
first learn about the use of exotic mortgages in the subprime market?
Were standards inadequate or not enforced? What do they recommend to
people who are facing foreclosure?
The House Domestic Policy
Subcommittee will hold a hearing today titled 'Foreclosure, Predatory
Mortgage and Payday Lending in America’s Cities' at 2 p.m. in 2154
Rayburn House Office Building.
href='http://kucinich.house.gov/News/DocumentSingle.aspx?DocumentID=60824'>Click
here for the list of panelists scheduled to testify at today's
hearing.
The Senate Banking Committee will hold a hearing tomorrow at 10
a.m. titled “
href='http://banking.senate.gov/index.cfm?Fuseaction=Hearings.Detail&HearingID=254'>Mort
gage Market Turmoil: Causes and Consequences” in 538 Dirksen
Senate Office Building. Witnesses to be announced.
The House Subcommittee on
Financial Institutions and Consumer Credit will also hold a hearing
titled 'Subprime and Predatory Lending: New Regulatory Guidance, Current
Market Conditions, and Effects on Regulated Financial Institutions' at
10 a.m. on Tuesday, March 27, in 2128 Rayburn House Office Building.
Witnesses will be by invitation only.
name='2'>People's Choice Home Loan Files for
Bankruptcy
People's Choice Home Loan
Inc., a subprime mortgage lender, filed for chapter 11 filing yesterday
in the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Santa Ana
w:st='on'>
size='3'>Calif.
News reported yesterday. People's Choice, based in
w:st='on'>
size='3'>Irvine
w:st='on'>
size='3'>Calif.
fourth subprime lender to file for bankruptcy since December, joining
Ownit Mortgage Solutions LLC, Mortgage Lenders Network USA Inc. and
ResMae Mortgage Corp. People's Choice Funding Inc., which like
People’s Choice Home Loan is also a subsidiary of real estate
investment trust People's Choice Financial Corp., also filed for
bankruptcy yesterday. Both subsidiaries estimated that they have more
than $100 million each in both assets and liabilities, according to
court documents. Information about overlapping assets or creditors
wasn't immediately available. The cases
are In re People's
Choice Funding Inc., 07-10767, and
In re People's Choice Home Loan
Inc. 07-10765, U.S. Bankruptcy Court, Central
District of California (
w:st='on'>
size='3'>Santa Ana
size='3'>).
href='http://www.bloomberg.com/apps/news?pid=20601103&sid=atkiRNcdlZ8M&refer=us'>Rea
d more.
name='3'>Fannie Mae Ends Purchases of Loans by New
Century
New Century Financial, once the
nation’s largest independent provider of subprime mortgages, was
dealt another setback yesterday when Fannie Mae said that it would no
longer buy its loans made to borrowers with poor credit, Reuters
reported today. For New Century, Fannie Mae’s decision was a new
blow to a company whose lending practices are already under scrutiny by
investigators in a number of states. Fannie Mae severed business ties
with New Century, meaning that the lender can no longer sell its loans
to the leading American packager and reseller of mortgages. New Century
has managed so far to avoid a bankruptcy filing, but investors seemed to
be losing faith in its chances of continuing to do so. The news
yesterday sent its stock down 22 percent, to $1.69.
href='http://www.nytimes.com/2007/03/21/business/21lend.html?pagewanted=print'>Read
more.
name='4'>Mortgage Woes Beyond Subprime
Subprime mortgages have
been generating a lot of attention, and worry, among investors,
economists and regulators, but those loans may be only part of the
threat posed to the housing market by risky lending, according to a
CNNMoney.com yesterday. Some experts in the field are now concerned
about the so-called Alt. A mortgage loan market, which has grown even
faster than the market for subprime mortgage loans to borrowers with
less than top credit. Alt. A refers to people with better credit scores
(A-rated) who borrow with little or no verification of income, or
so-called alternative documentation. Standard & Poor's estimates
that the Alt. A market has gone from less than $20 billion in loans in
the fourth quarter of 2003 to more than $100 billion in each of the last
three quarters. Overall, new Alt. A loans totaled $386 billion in 2006,
according S&P's estimates - up 28 percent from 2005. The biggest
Alt. A lender is Pasadena, Calif-based IndyMac Bancorp, which
size='3'>Inside Mortgage Finance estimates did
$70.2 billion of the loans in 2006, up 48 percent from a year
earlier.
href='http://money.cnn.com/2007/03/19/news/economy/next_subprime/index.htm'>Read
more.
name='5'>Commentary: Mortgage Loan Debt Follows Familiar
Pattern
Though rising consumer
debt and questionable loan practices have long been a part of American
society, today’s version of the story typically involves a house
that a buyer couldn’t actually afford or a refinanced mortgage
that had a devil lurking in the fine print, according to a commentary
today in the New York
Times. More than a few families are going to
lose their homes this year, either because they were misled or because
they were unrealistic about the cost of financing their home purchase.
The fallout will further weaken the housing market and has the potential
to spill over into other parts of the economy, as Alan Greenspan warned
last week. Greenspan, the former Federal Reserve chairman, puts the odds
of a recession by the end of the year at one in three. Whatever the
outcome may be, it’s important to remember that the mortgage
market is following a classic cycle that nearly every other form of
consumer credit has also followed. When somebody comes up with an
innovation, be it consumer loans, credit cards or creative mortgages, it
inevitably leads to an explosion of borrowing that includes a good
amount of excess and downright abuse. After the abuse is cleaned up,
though, most families end up better off.
href='http://www.nytimes.com/2007/03/21/business/21leonhardt.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
Funds Oppose Northwest Offering
A group of hedge funds
that holds Northwest Airlines Corp. stock is asking the bankruptcy court
to delay a ruling on the company's request to conduct a rights offering
to raise up to $750 million to fund its bankruptcy exit, the Associated
Press reported yesterday. The equity securityholders' committee said
that the proposed rights offering doesn't reflect Northwest's fair
market value because the company didn't offer other legacy carriers or
'strategic investors' the right to purchase the equity. Northwest has an
obligation to 'canvass the market for all potential buyers to get the
highest and best price,' the group said. Northwest, which has been
sparring with the ad hoc committee for months, is slated to seek
permission for the rights offering from the U.S. Bankruptcy Court
in
size='3'>Manhattan on
Monday. The carrier will also seek approval Monday to send its chapter
11 plan, which includes the rights offering, to its creditors for a
vote.
href='http://www.forbes.com/feeds/ap/2007/03/20/ap3534992.html'>Read
more.
name='7'>Goldman Sachs Joins
face='Times New Roman' size='3'>Delphi
size='3'>Bailout Plan
Goldman Sachs Group Inc.
disclosed Monday that it has joined a $3.4 billion reorganization plan
that Delphi Corp. hopes will serve as the springboard for its emergence
from bankruptcy protection,
size='3'>Bankruptcy Law360 reported
yesterday. In
a filing with the Securities and Exchange Commission, Goldman Sachs said
it would buy up to 6.4 million shares of
w:st='on'>
size='3'>Delphi as part of the auto
supplier’s rights offering, which is being headed by hedge funds
Appaloosa Capital Management LP and Cerberus Capital Management LP. The
investment bank already owns 18.7 million shares of
w:st='on'>
size='3'>Delphi
to the filing. A federal bankruptcy judge first approved the $3.4
billion bailout plan in January, despite a handful of objectors that
wanted the supplier to accept a rival proposal.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20881'>Read
more. (Registration required.)
In related news, Delphi
Corp.’s second-largest union objected to the bankrupt auto parts
maker’s bid to extend its annual incentive plan on the grounds
that it will “prolong and complicate” its collective
bargaining negotiations, Bankruptcy Law360
reported yesterday. The objection, filed on Monday by the
International Union of Electronic, Electrical, Salaried, Machine and
Furniture Workers-Communications Workers of America, argues
against
size='3'>Delphi
supplemental key employee compensation program motion to extend the plan
through the first half of 2007. The objection comes amid intensive
meetings between the union and representatives from
w:st='on'>
size='3'>Delphi
and General Motors in an attempt to reach local and national agreements
at the auto parts manufacturer.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20914'>Read
more. (Registration required.)
name='8'>Trustee Seeks Chapter 7 Conversion for
Radnor
The U.S. Trustee
overseeing Radnor Holdings Corp.'s chapter 11 proceedings has renewed
her calls to have the bankrupt foam cup maker’s case converted to
chapter 7, arguing the move would be more affordable for the company and
in the best interests of creditors,
size='3'>Bankruptcy Law360 reported yesterday.
U.S. Trustee Kelly
Beaudin Stapleton’s
motion stated that Radnor’s case should be converted because
“there is a continuing loss to or diminution of the estate, there
is no reasonable likelihood of rehabilitation or reorganization, and the
debtors have failed to file the necessary and required operating
reports.” When Radnor filed a motion in February to authorize
Carroll Services LLC to provide wind-down and liquidation services,
Stapleton objected to the bid, arguing in part that the case should be
converted. She also said that Radnor’s move to hire a chief
liquidation officer would come at a significant cost “to perform
the simple function” of administering the company’s
remaining assets, a function that is carried out routinely by trustees
in chapter 7 cases.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20933'>Read
more. (Registration required.)
Bankruptcy Judge
size='3'>James M. Peck on Monday granted the
New York Racing Association’s request for a 10-month extension,
allowing the racetrack owner to maintain control of its chapter 11 plan
until at least January 2008, Bankruptcy Law360 reported
yesterday. NYRA claimed that it needed the extension because it could
not come up with a strategy to reorganize until it knew whether it would
win a contract renewal from
w:st='on'>
size='3'>New York
face='Times New
Roman' size='3'>State
size='3'>for its racetracks. The association said it would set up video
lottery machines at its Aqueduct racecourse, expected to take in $657
million annually, if it won an extension of its bankruptcy case. It
would then be able to propose a chapter 11 plan based on the projected
income from the lottery machines.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20929'>Read
more. (Registration required.)
name='10'>Bankruptcy Court Approves Tower Records Web
size='3'>Sale
Million
Bankruptcy Judge Brendan
Shannon approved the sale of Tower Records’ Web site business to
an affiliate of Miami-based music seller Caiman for about $4.2 million,
the Associated Press reported yesterday. Caiman, which sells music,
books and DVDs on its own site, is also a major reseller on
Amazon-dot-com. As part of the deal, Caiman agreed to assume some of
Tower Records' existing liabilities.
href='http://www.kesq.com/global/story.asp?s=6254922&ClientType=Printable'>Read
more.
International
name='11'>Two European Banks Weighing Deal Outline Motives for
Merging
The British bank Barclays
and a Dutch rival, ABN Amro, said Tuesday that after a merger, their
company would be listed in
size='3'>London, have its headquarters
in
size='3'>Amsterdam and
would split the top two jobs, Reuters reported yesterday. Barclays and
ABN also outlined a framework of objectives they aim to reach agreement
on, including using the Dutch Central Bank as lead regulator and having
a British board and governance and management structures. The banks are
in exclusive discussions about creating a company worth more than $160
billion, a result of the biggest financial services deal ever. If the
deal is agreed to, Barclays will probably pay more than $80 billion for
its rival, mostly or all in shares, analysts said. The two are said to
be trying to reach agreement within 30 days.
href='http://www.nytimes.com/2007/03/21/business/21bank.html?pagewanted=print'>Read
more.
name='12'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies lose
money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
To begin receiving the COMPLETE
Daily e-Summary, that emails you information on over 70 such companies
each morning, email
face='Times New Roman' color='#0000ff'
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font size='3'>your name, company name, address, phone and
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size='3'> We’ll set you up within 24
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size='3'>AES Corp., an
w:st='on'>
size='3'>Arlington
w:st='on'>
size='3'>Va.
company, warned that it’s now in default under a $600 million
credit agreement. The firm found some errors in earlier reported
financial statements related to derivatives, capitalization, income-tax
expenses and stock-based compensation.
size='3'>Autodesk Inc., a
w:st='on'>
Rafael
company, is restating financial results going back as far as eighteen
years because of stock-option grants. Autodesk will take related pretax
charges of between $39 million and $45 million.
size='3'>Coffee Holding Co., a
size='3'>Brooklyn
private-label and branded coffees, reported its first quarter net income
fell 40%–to $310,000. Sales declined 9%–to $12.6
million.
size='3'>Global Crossing Ltd., the Florham
Park, N.J. fiberoptic-network operator, reported a fiscal net loss of
$324 million. Revenue declined 5%–to $1.9
billion.
size='3'>Intek Plastics, a family-owned
Hastings, Mn. manufacturer of plastic products for the homebuilding
market, is in a deal to be acquired by Private Equity Capital Corp.
of
size='3'>Westport,
w:st='on'>
size='3'>Ct.
undisclosed amount. Intek, whose household plastics businesses has
suffered from weakness in the housing market, has trimmed its payroll by
more than 10% over the past several months. Last year, Intek reported
sales of $58 million.
size='3'>Lesco Inc., a Cleveland, Oh. seller
of fertilizer, grass seed and other turf products, reported a fourth
quarter net loss of $15.7 million. Revenue declined 20%–to $103
million. For the year, it lost $19.7 million on a 4% revenue
decline–to nearly $551
million.
size='3'>NovaStar Financial Inc., a
size='3'>Kansas City
w:st='on'>
size='3'>Mo. subprime
lender, announced plans to reduce its payroll by 350 jobs, amid weakness
in the subprime mortgage market. The firm will take charges related to
the cutbacks of between $2.7 million and $3.1 million.
size='3'>NovaStar Financial Inc., a
size='3'>Kansas City
w:st='on'>
size='3'>Mo. subprime
lender, announced plans to reduce its payroll by 350 jobs, amid weakness
in the subprime mortgage market. The firm will take charges related to
the cutbacks of between $2.7 million and $3.1 million.
size='3'>Sun Times Media Group Inc.,
the
size='3'>Chicago,
w:st='on'>
size='3'>Il
publisher, will receive more than $63 million through a legal settlement
of outstanding debt. David Radler, the former president of
Hollinger International Inc. (Sun Times Media’s former company),
agreed to pay more than $21 million of the amount, while Mr.
Radler’s wholly owned North American Newspapers Ltd. will pay
another $23.3 million. In addition, $11.8 million will be paid by
Horizon Publishing Co. and Bradford Publishing Co., two companies
controlled by former Hollinger executive Conrad Black. Both Mr. Black
and Mr. Radler have been charged with having looted the company. Mr.
Radler earlier agreed to settle civil fraud charges, without admitting
or denying any wrongdoing. Mr. Black’s trial is scheduled to begin
next week. Separately, Sun Times Media, whose operations include the
Sun-Times newspaper in
w:st='on'>
size='3'>Chicago
a fourth quarter net loss of $34.6 million. Revenue declined 6%–to
$110 million. For the year, it lost $56.7 million on a 9% revenue
decline–to $419 million.