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March 25, 2008
Mortgage
Crisis
id='1' name='1'>Senator
w:st='on'>
size='3'>Clinton
face='Times New Roman' size='3'> Calls for $30 Billion for Home
Mortgage Crisis
Senator Hillary Rodham
Clinton (D-N.Y.) yesterday called on Congress to provide $30 billion to
help states and communities reduce the number of foreclosures,
the New York
Times reported today. Clinton proposed several
other moves to deal with foreclosures, like tapping two former chairmen
of the Federal Reserve, Alan Greenspan and Paul A. Volcker, and former
Treasury Secretary Robert E. Rubin, to lead a “high-level
emergency working group” to recommend ways to restructure at-risk
mortgages to help avert more foreclosures.
w:st='on'>
size='3'>Clinton
endorsed federal legislation to expand the government’s ability to
guarantee restructured mortgages, which she believes would lead more
banks and other private entities to buy and resell mortgages.
Additionally,
face='Times New Roman' size='3'>Clinton
said that she would introduce legislation soon to provide
mortgage servicers with protection from litigation when they modified
mortgages.
href='http://www.nytimes.com/2008/03/25/us/politics/25campaign.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='2'>Federal Home Loan Banks Allowed to Purchase More
Mortgage-Backed Securities
The Federal Housing Finance
Board yesterday opened the door for federal home loan banks to purchase
more mortgage-backed securities, a step designed to inject cash into the
mortgage market and help ease pressure on mortgage rates,
CongressDaily reported. The move will provide 'well in excess
of $100 billion of additional liquidity to the [mortgage-backed
securities] market,' according to the board. Under the new policy, the
federal home loan banks for a period of two years will be able to hold
mortgage-backed securities equal to six times their capital, double the
previous amount. 'The targeted decision by the Federal Housing Finance
Board to enable the Federal Home Loan Banks to assist temporarily in
this period of stress, consistent with safe and sound operations, will
bring more liquidity to the mortgage market,' said Treasury Secretary
Henry Paulson.
name='3'>Wave of Foreclosures Drives Home Prices
Lower
A glut of foreclosed
homes of historic proportions is starting to drive down
size='3'>U.S.
size='3'>home prices faster as lenders put more properties on the market
and buyers show signs of interest, the
size='3'>Wall Street Journal reported today.
The oversupply is severe as some major markets, including
Vegas
w:st='on'>
Diego
sales have accounted for more than 40 percent of all sales in recent
months. New data yesterday suggested that pressures like these are
starting to drive prices low enough to attract some buyers back into the
market. Sales of previously occupied homes jumped 2.9 percent in
February from the month before, the National Association of Realtors
said, the first increase since July.
size='3'>The median price dropped 8.2 percent from a year earlier to
$195,900, the biggest drop recorded by the Realtors in the current
slump.
href='http://online.wsj.com/article_print/SB120640573882561087.html'>Read
more. (Registration required.)
name='4'>Thornburg Mortgage Amends Its By-Laws in Fight for
Survival
Thornburg Mortgage Inc., which
is scrambling to raise nearly $1 billion this week to avoid bankruptcy,
said that it has changed its by-laws to allow a single investor to buy
up to $300 million of stock, Reuters reported today. In a filing late
Monday with the U.S. Securities and Exchange Commission, Thornburg said
that its board of directors last week approved a change to allow such an
investment, so long as it would not jeopardize the company's
tax-friendly real estate investment trust status. Thornburg said that
shareholders were previously limited to a 10 percent ownership stake.
The company said that the financing was necessary to ensure that its own
lenders would not issue additional margin calls, or demands for cash or
collateral, for a year. The Santa Fe, N.M.-based company said
that if it did not raise $948 million within seven business days,
it might have to seek bankruptcy protection.
href='http://www.nytimes.com/reuters/business/business-thornburg.html?scp=3&sq=bankruptcy&st=nyt'>Read
more.
face='Times New Roman' size='3'>
name='5'>Delphi
size='3'> Seeks More Time for Bankruptcy Exit
Delphi Corp., facing the
prospect that its reorganization plan could start to unravel over the
next few weeks because of its inability to obtain $6.1 billion in loans,
is trying to buy itself more time, the
size='3'>Wall Street Journal reported today.
The company, the biggest supplier to General Motors Corp., faces a
series of deadlines beginning as early as March 31. A labor-cost-cutting
agreement involving GM and
size='3'>Delphi's biggest union is set
to expire that day, as does a pact with the Internal Revenue
Service involving more than $1 billion in potential company liabilities.
In papers filed with the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
w:st='on'>
size='3'>Delphi
extend those deadlines by a few weeks because the company is 'unlikely'
to exit from bankruptcy by March 31. In a Securities and Exchange
Commission filing Friday, the company acknowledged it has been unable so
far to obtain the financing it needs to exit from bankruptcy.
href='http://online.wsj.com/article_print/SB120641028076161337.html'>Read
more. (Registration required.)
name='6'>Asarco Seeks Chapter 11 Extension
Copper-mining company
Asarco LLC says it needs two more months to develop its plan to exit
bankruptcy protection as it enters the final stages of finding a buyer
for its assets, the Associated Press reported yesterday. Asarco
requested an extension of its deadline for filing its plan to June 10,
its tenth such request since filing for chapter 11 in August 2005. The
company said in court papers that with bidders for the company set to
submit offers by April 21, it can't realistically meet the existing
April 11 deadline. The sale will finance the company's exit from
bankruptcy. Bankruptcy Judge
size='3'>Richard Schmidt will consider the
request at an April 7 hearing.
href='http://www.chron.com/disp/story.mpl/ap/fn/5644608.html'>Read
more.
name='7'>Bondholders Seek Chapter 11 for PacificNet
Three bondholders are
seeking to force PacificNet Inc. into chapter 11, claiming that the
gaming technology and telemarketing company is not paying its bills, the
Associated Press reported yesterday. Officials of the Beijing-based
company couldn't be reached for comment on the involuntary bankruptcy
petition, which was filed Saturday in the U.S. Bankruptcy Court
in
size='3'>Wilmington,
w:st='on'>
size='3'>Del.
court papers, PacificNet owes Iroquois Master Fund Ltd. $2.5 million in
bond debt, Whalehaven Capital Fund about $958,000 and Alpha Capital AG
$685,000. Iroquois sued PacificNet over the debt in state court
in
size='3'>New York last
year, according to the company's most recent report to the Securities
and Exchange Commission. PacificNet will have an opportunity to
challenge the involuntary bankruptcy filing. In SEC filings, the company
has said there is substantial doubt that it will be able to continue as
a going concern, due to losses.
href='http://money.cnn.com/news/newsfeeds/articles/apwire/72ba66306f6e6ec57dc3e5ff6c67888e.htm'>Read
more.
Sea
Containers Creditors Call for Settlement Probe
Sea Containers Ltd.'s
unsecured creditors’ committee asked the court overseeing the
company's chapter 11 proceedings for permission to retain a consultant
to evaluate a multimillion-dollar settlement with two pension plans,
despite Sea Containers' opposition,
size='3'>Bankruptcy Law360 reported yesterday.
The proposed settlement, announced in February, presents several
unanswered questions, the committee argued in its Friday reply. Those
questions include how the settlement measures up against a calculation
of claims under the “prudent investor rule” and how the
pension trustees came up with a $69 million figure in connection with a
reserve for age-related equalization changes. The pension agreement,
with the trustees of Sea Containers' two main pension schemes, was
touted by Sea Containers as a milestone when the company asked for and
received an exclusivity extension in February. Pursuant to the proposed
settlement, the two plans would get a single allowed general unsecured
claim of $194 million, in addition to a $5 million payment for
administrative expenses and the creation of an additional $69 million
reserve for possible pension liabilities stemming from age-related
equalization charges when Sea Containers exits bankruptcy.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=50918'>Read
more. (Registration required.)
Feds
Balk at W.R. Grace Plan to Sell Polluted Sites
Assistant U.S. Attorney
General Ronald J. Tenpas objected to W.R. Grace & Co.'s plan to sell
off 10 contaminated industrial properties through its chapter 11
proceedings, claiming that the proposed deal doesn't do enough to ensure
those properties will be cleaned up,
size='3'>Bankruptcy Law360 reported yesterday.
Tenpas said that the proposed agreement does not address what impact the
deal would have on the company's obligations under its proposed
settlement agreement with the
w:st='on'>
size='3'>U.S.
size='3'>government or state and federal environmental laws and
regulations. In December, Grace tentatively settled an asbestos claim
with the government, agreeing to cede an allowed general unsecured claim
of $34 million for the cleanup of 34 Superfund sites. If the bankruptcy
court approves the settlement, money from the claim will reimburse the
U.S. Environmental Protection Agency for cleaning up the sites.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=50893'>Read
more. (Registration required.)
name='10'>Ethanex Likely to File for Bankruptcy
Protection
Ethanex Energy Inc. plans
to seek bankruptcy court protection in the “immediate
future,” according to its posting with securities regulators,
the Kansas City
Star reported today. The Basehor,
size='3'>Kan.
ended an agreement to buy a small ethanol plant in
w:st='on'>
size='3'>Nebraska
dismissed three of its six officials. Its decisions follow failed
efforts to raise $1.5 million in interim financing. Ethanex had
suggested bankruptcy as a possibility in a March 12 filing with the
Securities and Exchange Commission in which it outlined its financing
problems. The company originally planned to build three ethanol plants,
each able to produce 110 million gallons of the gasoline additive. Its
organizers raised $20 million in a private stock offering and then
registered the shares for public trading.
href='http://www.kansascity.com/382/story/544152.html'>Read
more.
name='11'>American LaFrance Creditors Call for
Trustee
Unsecured creditors of
bankrupt fire-truck manufacturer American LaFrance LLC have asked the
bankruptcy court to appoint a chapter 11 trustee to the case, claiming
that one person is controlling the debtors, secured lenders
and equity-holders involved in the case,
face='Times New













Roman'
size='3'>Bankruptcy Law360 reported yesterday.
In a motion filed Friday, the company’s unsecured creditors’
committee revealed that Lynn Tilton, the only member of the
company’s board of managers, also manages Patriarch Partners
Agency Services LLC, the agent for ALF’s pre- and post-petition
lenders that currently hold all of the debtor’s equity.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=50928'>Read
more. (Registration required.)
name='12'>Health Care Exec. Denies Trying to Bribe Witness in Fraud
Case
Former health care executive
Lance Poulsen, the government's chief target in a $1.9 billion corporate
fraud case, repeatedly denied trying to bribe a key witness to give
favorable testimony, the Associated Press reported yesterday. Poulsen
said that the witness, former employee Sherry Gibson, misunderstood his
attempts to help her. Poulsen testified for the first time in a case
that dates to National Century Financial Enterprises' 2002 bankruptcy, a
downfall for a corporation that once boasted it was the country's
largest health care financing company. The company's demise led to a
host of civil lawsuits, including one by the Securities and Exchange
Commission, and to criminal convictions of at least nine former
employees, including Gibson, a former executive vice president.
Prosecutors allege that Poulsen and other former executives of National
Century moved money to cover up shortfalls, fabricated data and lied to
investors. Poulsen said yesterday he was innocent of any crime related
to the fraud allegations.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/03/24/AR2008032402755_pf.html'>Read
more.
International
name='13'>Canadian Group Urges Caisse to Buy Commercial
Paper
A group of Canadian investors
wants pension funds such as the Caisse de Depot et Placement du Quebec
to buy their insolvent commercial paper to ensure a C$32 billion ($31.4
billion) rescue plan for the debt succeeds, Bloomberg News reported
yesterday. A group of
institutional investors including the Caisse, which holds more of the
frozen paper than any other firm, proposed a plan last week to convert
the commercial paper to new notes that mature within nine years.
size='3'>Canada's
largest restructuring requires the support of a majority of individual
noteholders, many of whom say they will reject the plan because they
can't wait nine years to be repaid on debt that was supposed to mature
in 30 to 90 days. The value of the commercial paper has dropped to about
56 percent of its original value, RBC Capital Markets analyst
Andre-Philippe Hardy wrote yesterday in a note to investors. That's
because of a decline in the value of
w:st='on'>
size='3'>U.S.
size='3'>subprime assets and structured debt securities that make up
about half of the frozen paper, the analyst said. He estimated that the
C$3 billion in paper backed by subprime loans has plunged to about a
fifth of its original value.
href='http://www.bloomberg.com/apps/news?pid=20601082&sid=aavATZyWfGf8'>Read
more.
href='http://www.bloomberg.com/apps/news?pid=20601082&sid=aavATZyWfGf8'>