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March 22, 2005
Fed Expected to Raise Rates
The Federal Reserve is expected to raise U.S. interest rates for a
seventh straight time today, Reuters reported. The policy-making Federal
Open Market Committee is expected at about 2:15 p.m. EST to announce
another quarter-percentage point rise in the federal funds rate—to
2.75 percent.
FTC Settles with AmeriDebt: Company to Shut Down
The Federal Trade Commission (FTC) announced yesterday an agreement
with AmeriDebt Inc. that seeks to recoup millions of dollars for
consumers and calls for the nonprofit to shut down its credit counseling
operations, the Baltimore Sun reported. Under the
settlement, the FTC said it would make a $170 million claim against
AmeriDebt to create a restitution fund for customers who overpaid for
counseling services over the years.
Northern District Likely to Add Third Bankruptcy Judge
A new bankruptcy judge position in New York’s Northern District
is likely to come soon as bankruptcy cases have surged in the 32-county
district, the Associated Press reported. The U.S. Senate earlier this
month approved the addition of a temporary third judge in the district,
which stretches from the Albany area north to the Canadian border and
west to Syracuse and Binghamton.
National Benevolent Assoc. Changed Bylaws, Gave Executives Contracts
Before Bankruptcy
The National Benevolent Association’s board approved employment
contracts for top executives and agreed to pay executives and board
members’ expenses if they were investigated for wrongdoing about
seven months before the nonprofit filed for bankruptcy, the St
Louis Business Journal reported. The changes in the
association’s bylaws mean officials of the organization now have a
financial shield against potential investigations or criminal and civil
lawsuits.
Credit Counselors Brace for Influx of New Clients
The likely passage of bankruptcy reform legislation has credit
counselors bracing for a wave of business that, for now, most are not
equipped to handle, bizjournals.com reported. Under the bill,
individuals filing for bankruptcy must first meet with a nonprofit
credit counselor to obtain certification before they can apply for
bankruptcy protection. John Wills, director of Consumer Credit
Counseling Service of Greater Greensboro, said he expects to be
‘bombarded’ once the law goes into effect.
Supra Telecom Emerges from Bankruptcy
Supra Telecom, the 2nd largest telecommunications provider in Florida
with 260,000 customers and annual revenues exceeding $150,000,000, has
emerged from bankruptcy, I-newswire.com reported.
Hawaiian Reports February Loss
Hawaiian Airlines reported a net loss of $1.9 million in February, a
sharp decrease from a profit of $596,000 in February 2004, the
Sacramento Business Journal reported. However, the
airline’s revenue continued to increase to $56.8 million in
February compared to $54.3 million in February 2004.
Bids for Chicago Express to Be Accepted Until Friday
ATA Holdings Corp. will accept bids for Chicago Express through
Friday, close down the commuter line Monday and sell it on April 1, the
Indianapolis Star reported. If no $1 million-plus bids are
received, the sale will be scuttled and bankrupt ATA instead most likely
will liquidate the commuter line, the newspaper reported.
Kmart to Exploit Real Estate with New Selling Tactics
If shareholders of Sears, Roebuck and Co. approve the takeover of
their company by Kmart Corp. on Thursday, one of the first tasks that
new Chairman Edward S. Lampert will tackle is converting up to 100 Kmart
stores to Sears Essentials convenience-like stores this year, and up to
400 Kmarts within three years, Chicago Sun Times said.
Lampert proposes to unlock the value of the company’s property by
selling poorly performing assets that have underlying worth, and
exploiting the remaining real estate with new selling tactics.
Judge Approves Diocese Plan to Sell Property to Pay Abuse
Victims
A federal bankruptcy judge yesterday approved a Roman Catholic
Diocese of Tucson plan to sell about 85 pieces of property to help pay
victims of sexual abuse by priests, FOX11AZ.com reported. U.S.
Bankruptcy Judge James M. Marlar gave diocesan officials the go-ahead
during a brief hearing yesterday after none of the creditors objected to
the marketing plan and sale, which is expected to take place in about
eight weeks.
Tower Proposes $13.2 Million in Retention Bonuses
Tower Automotive Inc. is scheduled for a March 30 hearing in U.S.
Bankruptcy Court in New York City on its proposed employee-retention
plan to pay up to $13.2 million in performance bonuses to about 100
employees, Crains Detroit Business reported. The plan is a
part of Novi-based Tower’s reorganization plan. The supplier of
automotive frames and other steel parts filed for chapter 11 bankruptcy
protection in February.
Time Warner and SEC Settle for $300 Million
Time Warner Inc. will pay $300 million to settle federal fraud
charges for overstating online advertising revenues and the number of
its Internet subscribers, the SEC announced today. As part of the
agreement, the Associated Press reported, Time Warner will
neither admit nor deny the SEC’s allegations. The company also
agreed to restate its financial results to reduce the amount of reported
online advertising revenues by about $500 million from the fourth
quarter of 2000 through 2002.
Judge Approves Brobeck Settlements; Former Partners to Pay About $23
Million
The majority of Brobeck, Phleger & Harrison’s former
partners are finally free of legal fallout from the firm’s
collapse, the Recorder reported. At a hearing yesterday,
U.S. Bankruptcy Judge Dennis Montali approved the individual settlement
agreements that Brobeck trustee Ronald Greenspan had inked with 207
partners. The partners together will pay about $23.65 million to the
estate and release the estate from claims of $36.4 million.
MCI
Qwest and Verizon in a Duel of Letters, Trying to Buy MCI
The takeover fight for MCI took another twist yesterday when the
chairmen of Qwest Communications and Verizon Communications both
released letters stating their cases for being permitted to buy the
troubled long-distance carrier, the New York Times
reported. Qwest’s chairman, Richard C. Notebaert, sent a letter to
MCI expressing his concern that his company’s latest bid was being
ignored. That came a few hours after Ivan G. Seidenberg, Verizon’s
chairman, made public a 10-page letter that dismissed Qwest’s
projected cost savings from an MCI purchase as “modern
fiction.”
WorldCom Ex-Chairman Pays $4.5 Million to Settle Suit
Bert C. Roberts Jr., WorldCom’s onetime chairman, will pay $4.5
million as part of a $60.75 million settlement among the former
directors, said Max W. Berger, a lawyer representing the New York State
Common Retirement Fund, lead plaintiff in the case, the online
Wall Street Journal reported. Eleven of the former
directors agreed to a $55.25 million settlement in the case on
Friday.