href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif'>
August 29, 2006
id='1'>Bankruptcy Filings Fall in
Wake of New Law
The Administrative Office
of the U.S. Courts reported that nearly 1.48 million personal and
business bankruptcies were filed in the year ending June 30, a 9.3
percent drop from the previous year, according to Bloomberg News
yesterday. Individual filings fell to 1.45 million from 1.6 million and
business filings fell by 2.6 percent to 31,562. “To the extent
Congress had a goal of simply reducing bankruptcy filings, the
proponents of the law can stand up and say, `Hey, we've set out to
achieve this, and we have','' said ABI executive director
Samuel Gerdano
size='3'>. “That doesn't mean the law is working as intended, nor
is it an indicator of financial health.” Gerdano projects that
calendar year 2006 filings will be the lowest since 1986, when 530,000
bankruptcy petitions were filed. Through June 30, 271,000 individuals
and businesses filed for bankruptcy protection, he said, citing
institute figures.
href='http://www.bloomberg.com/apps/news?pid=20601103&sid=a9xJmmLY14eU&refer=us'>Read
more.
href='/am/Template.cfm?Section=Press_Releases3&ContentID=42654&TEMPLATE=/CM/ContentDisplay.cfm'>Click
here to read ABI’s press release on the 2006 second-quarter
bankruptcy filing statistics.
id='2'>One Year After
Katrina, Bankruptcy Concerns Hover over
w:st='on'>
Orleans
Despite lawmakers’
efforts to provide relief, small businesses and consumers in Louisiana
are still struggling to stave off insolvency one year after Hurricane
Katrina, which wrought an estimated $75 billion worth of damage on the
Gulf Coast, Portfolio
Media reported yesterday. Approximately 81,000
businesses in
face='Times New Roman' size='3'>Louisiana
were damaged in the storm, and although 75 percent have
since reopened, around 19,000 businesses have been permanently
shuttered, according to the Census Bureau. The problem is exacerbated by
the fact that
face='Times New Roman' size='3'>New
Orleans
historically relied on the tourism industry, says Michelle
Mendez of Jenkens & Gilchrist’s bankruptcy practice.
Earlier this year, the Bureau of Governmental Research (BGR) and the
Public Affairs Research Council of Louisiana (PAR) said that 2006
size='3'>New Orleans
tax revenues were expected to plummet 54 percent from 2004, dropping
from $151 million to $69 million.
SGI
Objects to LGE’s
Patent Claims in Chapter 11 Case
Silicon Graphics Inc.
filed an objection to claims made by its rival LG Electronics over
patent infringement in SGI’s chapter 11 bankruptcy case, asking
the court on Monday to disallow them in their entirety,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. LGE sought court permission earlier this
month to file a patent infringement lawsuit against SGI over eight
patents concerning computer technology that includes memory and video
expansion and compression systems. LGE filed a proof of claim against
the debtors and a motion seeking relief from the automatic stay in order
to proceed with its patent infringement claims against SGI. A hearing on
SGI’s objections is set for Oct. 4, and the response deadline in
the matter is Sept. 28. The case is In re Silicon Graphics Inc. et al., case number
06-10977, in the U.S. Bankruptcy Court for the Southern District of New
York.
id='4'>Commentary: Ford’s
Recovery Plan Reminiscent of Nearly 20 Years Ago
Ford Motor Co.’s
announcement earlier this month that it would slash North American
vehicle production by 21 percent in the fourth quarter, and just eight
months after it said it would close factories and cut jobs, is
reminiscent of the response it took in the 1980s to recover from
financial difficulty, according to a Bloomberg News commentary
today. Ford's
response to a crisis more than a quarter-century ago, when it also shut
plants, eliminated jobs and cut costs, helped the automaker bounce back
stronger than ever from the brink of bankruptcy. The trouble at Ford
today isn't weak demand for cars in the United States
size='3'>, as it was 26 years ago; rather, the Dearborn, Mich.-based
automaker finds itself burdened by daunting health care and pension
costs, plus a dysfunctional corporate and manufacturing structure. That
translates into a company that fails to make cars that enough consumers
prefer to those made by non-U.S. automakers such as Toyota Motor
Corp.
href='http://quote.bloomberg.com/apps/news?pid=20601039&sid=akvnq8xHqQSk'>Read
more.
id='5'>Ex-Enron Execs Denied
Attorney-Client Privilege
Marking a setback for a
bankrupt Enron Corp. unit, a federal bankruptcy judge has ruled that
communications between two former executives are not protected from
disclosure by the attorney-client privilege under the crime-fraud
exception, Portfolio
Media reported yesterday. The ruling, handed
down last Friday by Bankruptcy Judge Arthur
face='Times New Roman' size='3'>Gonzalez in
the U.S. Bankruptcy Court for the Southern District of New York, granted
a motion by Travelers Casualty and Surety Company of
w:st='on'>
size='3'>America
size='3'>to compel disclosure of communications between the two
executives, former manager of finance David Thames and former director
Brian Spector. The dispute stems from a 2001 agreement between Global
Crossing and Enron Broadband Services L.P. Global Crossing agreed to
provide broadband capacity to EBS, which prepaid $17.5 million for the
contract. Global Crossing also furnished a surety bond for the full
amount of the prepayment in the event that it failed to perform under
the contract. Travelers Casualty later issued a bond to Global Crossing
in favor of EBS. The combination of this sale and the contract
constituted a loan, Travelers argued, asserting that it was fraudulently
induced to issue a bond in connection with a loan.
id='6'>Prudential to Pay Fine for
Inappropriate Trading
Life insurance company
Prudential Financial agreed yesterday to pay $600 million to settle
charges with federal and state regulators that one of its units engaged
in inappropriate mutual fund trading, the New York Times
reported today. The payment, the second-largest levied
against a financial institution over the practice, may bring to a close
a three-year investigation into the improper trading of mutual funds
that has ensnared some of the largest names on Wall Street and the
mutual fund industry. The settlement with the Justice Department, which
covers trades totaling more than $2.5 billion made from 1999 to 2000, is
also the first in the market timing scandal in which an institution has
admitted to criminal wrongdoing. Such a concession by Prudential, part
of a deferred prosecution agreement that will last five years,
underscores the extent to which the improper trading practices were not
only widespread at Prudential Securities, but also condoned by its top
executives, despite repeated complaints from the mutual fund
companies.
href='http://www.nytimes.com/2006/08/29/business/29fund.html?ref=business&pagewanted=print'>Read
more.
International
Commentary:
size='3'>
id='7'>China
size='3'>’s Bankruptcy Law Sorely Needed
China's legislature took
a step toward a market economy as it passed the Enterprise Bankruptcy
Law on Sunday, a 12-chapter law that's meant to unify the country's
current measures of bankruptcy laws, regulations and precedents,
according to a commentary in today’s Wall Street
Journal. Under current practice, state-owned
company bankruptcy was largely governed by a 1998 law that referred to
firms 'owned by the whole people.' Given the rapid sale of state assets,
that definition lost meaning. The law also was riddled with exceptions;
such as the one that gave state employees in 111 cities -- covering
almost all the major industrial areas -- precedence over secured and
unsecured creditors.
face='Times New Roman'
size='3'>China
enforcement of bankruptcy rulings was sorely lacking, too. Unlike
the United States or United Kingdom, the
mainland doesn't possess a specialist bench for bankruptcy proceedings.
href='http://online.wsj.com/article/SB115680919898047872-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>Read
more. (Registration required.)
id='8'>Court to Consider Yukos
Bankruptcy Appeal in September
The Moscow Arbitration Court of
Appeals will consider a motion by the Yukos Oil Co. against a ruling on
its bankruptcy on Sept. 19, the Russian News and Information Agency
reported today. On Aug. 23, a court upheld a decision by a meeting of
Yukos creditors to declare the company bankrupt, rejecting an appeal
lodged by the company. The Yukos group now faces a total of $16.6
billion in claims from creditors, including Rosneft-owned former
production unit Yuganskneftegaz ($4.07 billion), the Federal Tax Service
($11.6 billion), Rosneft ($482 billion) and more than 20 other
companies.
href='http://en.rian.ru/russia/20060829/53275368.html'>Read
more.
href='http://en.rian.ru/russia/20060829/53275368.html'>