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September 16,
2008
Judiciary Hearing to Focus on Bankruptcy Trustee
Compensation
The House Judiciary
Committee will hold a hearing today examining the issue of bankruptcy
trustee compensation. ABI Resident Scholar Jack Williams is scheduled to
testify along with Robert Furr of Furr and Cohen, P.A. (Boca Raton,
Fla.), Eugene Crane of Crane, Heyman, Simon, Welch & Clar (Chicago.)
and Bankruptcy Judge
size='3'>Margaret Dee McGarity (Milwaukee).
The hearing will take place in Room 2141 of the Rayburn House Office
Building at 2 p.m. ET.
href='http://judiciary.house.gov/hearings/hear_090916_1.html'>Click
here to read the prepared witness testimony.
name='2'>President Says Economy Strong Enough to Handle Financial
Turmoil
President Bush yesterday
lamented what he described as 'painful' adjustments in U.S. financial
markets following the collapse of the Lehman Brothers investment firm,
but he gave no indication of any further federal bailouts and said that
the markets are resilient enough to handle the disruptions, the
Washington Post
reported. Bush said that his administration is 'working
to reduce disruptions and minimize the impact of these financial market
developments on the broader economy.' He expressed appreciation for the
work of the Treasury Department, the Federal Reserve, the Securities and
Exchange Commission and major financial institutions in promoting
stability. The President’s remarks indicated that no federal help
would be forthcoming for Lehman Brothers Holdings Inc. and other
teetering Wall Street firms.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR2008091501283_pf.html'>Read
more.
name='3'>Creditors Look to Salvage Investments in Lehman
Bros.
A worldwide battle began
on Monday over the remains of Lehman Brothers as the largest bankruptcy
filing in history sent creditors scrambling to protect their
investments, the New
York Times reported today. Lawyers for global
companies like JPMorgan Chase, the General Electric Capital Corporation
and Credit Suisse headed to court along with small investors like
Arapahoe County, Colo., and the Carrollton-Farmers Branch Independent
School District in the suburbs of Dallas. In its bankruptcy filing,
Lehman listed total assets of $639 billion, roughly 10 times the size of
Enron when it filed for bankruptcy in 2001. The combination of
Lehman’s size and the complexity of its financial transactions
promises to make bankruptcy proceedings quite difficult. Banks in Japan,
Singapore and of course New York are owed hundreds of millions of
dollars by Lehman and appeared on its initial list of 30 large
creditors.
href='http://www.nytimes.com/2008/09/16/business/16bankruptcy.html?ref=business&pagewanted=print'>Read
more.
A
Race for Cash at A.I.G. as Ratings Are Downgraded
Major credit ratings
agencies downgraded the American International Group (A.I.G.) late
yesterday, worsening its financial health as Federal Reserve officials
and two leading investment banks were in urgent talks to put together a
$75 billion line of credit to stave off a crisis at the company,
the New York
Times reported today. The credit downgrades
are likely to force the company to turn over billions of dollars in
collateral to its derivatives trading partners. Without the financing,
which was being arranged by Goldman Sachs and JPMorgan Chase in talks
with the Federal Reserve officials, A.I.G. might be forced to declare
bankruptcy.
href='http://www.nytimes.com/2008/09/16/business/16aig.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='5'>Economic-Stimulus Plan Lacks Bipartisan
Backing
House Democratic leaders
plan to push for action on a $50 billion economic-stimulus package,
betting that financial-market turmoil will overcome Republican
reluctance to spend more on highways and bridges, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The White House has so far resisted proposals
for a second stimulus package, as have Republican congressional leaders.
Democrats say that the measure is needed to create jobs and bolster
public confidence in the U.S. economy. Democratic leaders hope to move
the bill to the House floor late this week or early next, after
concluding action on legislation that would overhaul U.S. energy policy.
The biggest piece of the Democratic bill would provide funding for
infrastructure projects, congressional sources said. The bill would also
provide money for food stamps and help to cash-strapped states that are
shouldering increased costs in Medicaid, the health program for the
poor.
href='http://online.wsj.com/article/SB122152277104639601.html'>Read
more. (Subscription required.)
Signs Off on Whitehall Settlement
Bankruptcy Judge
Kevin Gross
size='3'>on Thursday approved Whitehall Jewelers Inc.’s plan to
pay back more than 120 vendors across the United States by the end of
September, Bankruptcy
Law360 reported yesterday. Under the agreement
that Whitehall Jewelers filed on Aug. 18, creditors would receive the
proceeds of the liquidation of some $146 million in assets, not
including $61 million in consignment goods. The proceeds of the sale are
set to be returned to vendors across the country by the end of the
month. Judge Gross said that the agreement would have no effect on
creditors with nonderivative claims against Whitehall Jewelers who did
not sign on to it, unless ordered by the court.
href='http://bankruptcy.law360.com/articles/69197'>Read
more. (Subscription required.)
name='7'>Asarco Amends Chapter 11 Plan
Mining company Asarco LLC
filed the first amendment to its reorganization plan on Friday,
establishing a $750 million asbestos trust and enjoining certain
asbestos claims,
size='3'>Bankruptcy Law360 reported yesterday.
The company's amended chapter 11 plan permanently enjoins holders of
unsecured personal injury asbestos claims from taking any action against
any of the company's protected parties. Asarco's amended complaint also
stipulates that asbestos trustees are entitled to “pursue,
compromise or settle” asbestos insurance actions or asbestos
insurance recoveries.
href='http://bankruptcy.law360.com/articles/69242'>Read
more. (Subscription required.)
name='8'>Barclays in Talks to Buy Lehman Securities
Unit
Barclays Plc, the U.K.'s
third-biggest bank, is in talks to buy assets from bankrupt Lehman
Brothers Holdings Inc. two days after abandoning plans to acquire the
entire securities firm, Bloomberg News reported today. The London-based
bank would take over licenses, buildings and as many as 10,000 people
who trade and underwrite securities and advise on acquisitions. Lehman
is also in discussions to sell its investment-management unit to
private-equity bidders including Bain Capital LLC, Clayton Dubilier
& Rice Inc. and Hellman & Friedman LLC. Lehman is proceeding
with an auction announced last week as part of Chief Executive Officer
Richard Fuld's failed plan to save the 158-year-old firm.
href='http://www.bloomberg.com/apps/news?pid=20601085&sid=a123awQrd7Mg&refer=europe'>Read
more.
name='9'>Concern Turns Toward Goldman Sachs, Morgan
Stanley
Lehman Brothers Holdings
Inc.'s filing for bankruptcy protection and Merrill Lynch & Co.'s
rushed sale to Bank of America Corp. put pressure on Morgan Stanley and
Goldman Sachs Group Inc. to convince investors that they will survive
the market turmoil, the
size='3'>Wall Street Journal reported today.
The debate over the future of the two firms illustrates the depths of
concern facing Wall Street about how widely the housing downturn's
ripple effects will be felt. Investment banks, commercial banks and
insurers all made bad bets that housing prices would stay firm. But the
bets were unusually large and leveraged at investment banks such as
Lehman, Merrill Lynch and Bear Stearns Cos., which was forced into the
arms of J.P. Morgan Chase & Co. earlier this year. Some experts
think Goldman and Morgan Stanley -- no matter how well-managed by CEOs
Lloyd Blankfein and John Mack, respectively -- need to take drastic
steps to avoid the same fate.
href='http://online.wsj.com/article/SB122152499457040017.html'>Read
more. (Subscription required.)
International
name='10'>Some Alitalia Unions Agree on Rescue
Plan
Alitalia appeared to inch
back from the verge of bankruptcy yesterday as four of its nine unions
agreed on the outline of a business plan for the carrier, but
negotiations continued on the thornier challenge of a new labor
contract, the New York
Times reported today. Unions and a group of 16
investors were engaged in talks, brokered by the Italian government, to
try to keep the airline flying and stop its administrator, Augusto
Fantozzi, from starting to liquidate its assets. A copy of the
agreement, obtained by the
size='3'>International Herald Tribune, showed
that Alitalia’s four big unions — CGIL, CISL, UGL and UIL
— had agreed in principle to a plan to cut more than 3,000 jobs,
setting out ways to find new work for those who were laid off and
outlining operating plans for the airline’s cargo and heavy
maintenance divisions.
href='http://www.nytimes.com/2008/09/16/business/worldbusiness/16alitalia.html?ref=business&pagewanted=print'>Read
more.
href='http://www.nytimes.com/2008/09/16/business/worldbusiness/16alitalia.html?ref=business&pagewanted=print'>