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August 19, 2008
Delphi to Cut Nearly 600
Jobs
Delphi Corp. said yesterday that its electronics and safety division
will lay off about 600 of its 3,200 U.S. salaried workers, blaming a
steep drop in automaker demand for its components, the Associated Press
reported yesterday. Delphi said that the job cuts are part of a plan to
cut the division's total costs by 25 percent as a result of the dramatic
decrease in North American vehicle production this year. The bulk of the
job cuts will take place in Kokomo, Ind., where about 2,500 of the
division's white-collar workers are based. The rest of the cuts will
come from other locations in places such as the Michigan cities of Flint
and Auburn Hills, along with Milwaukee and Vandalia, Ohio.
href='http://money.cnn.com/2008/08/18/news/companies/delphi_jobs.ap/index.htm?section=money_latest'>Read
more.
Hedge Fund Files for
Bankruptcy
Hedge fund SageCrest Finance LLC filed for chapter 11 protection on
Sunday listing assets of $50 million to $100 million and debt in the
range of $1 million to $10 million, Reuters reported yesterday. The
Greenwich, Conn.-based fund, managed by Windmill Management LLC,
describes itself as a 'credit opportunity fund' that provided short-term
debt to companies. SageCrest is the latest in a growing number of hedge
funds to face losses in the wave of soured bets in the credit market. In
the first seven months of the year, the average hedge fund lost 3.54
percent and managers and investors at various funds have said that many
clients are pulling their money out of these portfolios.
href='http://www.reuters.com/article/marketsNews/idUSN1847775620080818'>Read
more.
Steve & Barry's Finds Likely
Buyer
New York investment firm Bay Harbour Management LC is the leading
candidate to purchase the assets of discount retailer Steve &
Barry's LLC out of bankruptcy with a plan to keep open anywhere from 125
to 200 stores, the Wall Street Journal reported today. Steve
& Barry's had 276 stores when it filed for chapter 11 protection in
early July. An auction for the retailer's assets, including store
leases, merchandise and celebrity or brand licenses, continued in
midtown Manhattan yesterday and is expected to wrap up today. Should Bay
Harbour win the auction, the number of Steve & Barry's stores that
remain open will depend on the lease concessions Bay Harbour wins from
Steve & Barry's current landlords. Some landlords are resisting
efforts to cut rents while they also deal with bankruptcies and store
closings by other retailers such as Sharper Image Corp., Linens 'n
Things and Mervyn's LLC.
href='http://online.wsj.com/article/SB121910325720751365.html?mod=hpp_us_whats_news'>Read
more. (Subscription required.)
In related news, creditors of Steve & Barry's LLC have asked the
judge overseeing the company's bankruptcy to stop a $5 million payment
to the company's founders, Bankruptcy Law360 reported
yesterday. The creditors asked Bankruptcy Judge Allan L.
Gropper to consider the payment to Steve & Barry's founders
Steven Shore and Barry Prevor equity rather than a secured loan. On June
20, Shore and Prevor purchased a $5 million junior stake in a $197
million revolving credit facility underwritten by General Electric
Capital Corp. and National City Bank, a subsidiary of National City
Corp., according to the motion.
href='http://bankruptcy.law360.com/articles/66409'>Read
more. (Subscription required.)
American Home Mortgage Files
Liquidation Plan
American Home Mortgage Inc. has filed its chapter 11 plan, which lays
out its strategy for creating a liquidating trust and winding down the
estates and cases of AHM and its seven affiliated debtors without
substantive consolidation, Bankruptcy Law360 reported
yesterday. The plan calls for a liquidating trust to be overseen by a
trustee, whose duties will include liquidating noncash assets including
causes of action, reconciling all claims against the debtors and making
distributions, according to the disclosure statement. A hearing to
consider the adequacy of the disclosure statement is scheduled for Sept.
15. Read
more. (Subscription required.)
FDIC Presses Bank Regulators on
Confidential Ratings of Commercial Banks
The Federal Deposit Insurance Corp. (FDIC) officials have pushed other
agencies to more forcefully downgrade the confidential rating known only
to regulators and bank management of troubled financial institutions,
the Wall Street Journal reported today. The FDIC's strategy could result
in more public enforcement actions and could give the FDIC more muscle
to either force the companies to improve their balance sheets or seek a
sale. The FDIC's push is being met with resistance from regulators with
primary responsibility for these institutions. For example, the Office
of Thrift Supervision, a division of the Treasury Department that
supervises more than 800 savings-and-loan institutions, largely focused
on mortgage lending, has resisted the FDIC, arguing for a less-dire
analysis.
href='http://online.wsj.com/article/SB121910451437851359.html?mod=us_business_whats_news'>Read
more. (Subscription required.)
Court Approves Asarco Asbestos
Claimants' Committee
Bankruptcy Judge Richard Schmidt agreed to the
formation of an asbestos claimants' committee to represent creditors
with asbestos-specific claims in the suit of copper-mining company
Asarco LLC, Bankruptcy Law360 reported yesterday. The new
committee will be made up of members of the unsecured creditors'
committee for the subsidiary debtors and three new members with asbestos
premises liability claims against the mining company. The asbestos
claimants' committee will function separately from the unsecured
creditors' committee and cannot take a position regarding liability for
the official committee's asbestos-related claims, the order
said. Read
more. (Subscription required.)
Judge Approves Extension for Tricom to
File a Reorganization Plan
Bankruptcy Judge Stuart M. Bernstein has given Tricom
SA an additional 120 days to obtain approval of its reorganization plan
after the telecommunications company argued for the extension amid
allegations that the company stole $120 million from Bancredit Cayman
Ltd., Bankruptcy Law360 reported yesterday. In an order signed
Aug. 13, Judge Bernstein agreed to give Tricom until Dec. 31 to amend or
modify its plan, which may require a resolicitation of acceptances from
creditors in light of the accusations by Bancredit Cayman.
href='http://bankruptcy.law360.com/articles/66343'>Read
more. (Subscription required.)
Brokerages Balk at Prospect of Buying
Back Auction-Rate Securities
Raymond James Financial Inc., Stifel Nicolaus & Co., Oppenheimer
& Co. and Fidelity Investments are among the brokerage firms that
say they shouldn't be on the hook to buy back the billions of dollars of
auction-rate securities they sold just because big investment banks are
doing so, the Wall Street Journal reported today. In recent
weeks, UBS AG, Citigroup Inc., J.P. Morgan Chase & Co., Morgan
Stanley, Merrill Lynch & Co. and Wachovia Corp. have agreed to buy
back more than $40 billion of auction-rate securities from their
clients, including individuals, charities and small-business investors.
The brokerages say they were merely sellers of auction-rate securities,
which differentiate them from the investment banks that ran the
auctions. They say they were kept in the dark as much as their customers
about the problems brewing in that market since last August.
href='http://online.wsj.com/article/SB121910359504651393.html?mod=us_business_whats_news'>Read
more. (Subscription required.)
Barbeques Galore Files for
Bankruptcy
Barbeques Galore Inc., a closely held retailer of barbeque grills and
accessories in the United States and Australia, filed for chapter
11 protection on Friday, listing assets and debts of $10 million to $50
million each, Bloomberg News reported yesterday. Barbeques Galore
estimated it has from 1,000 to 5,000 creditors and said that it plans to
sell the company or form “a consensual liquidating plan”
with its bank lenders. The company's stores, concentrated in California,
Texas, Arizona and Nevada, have 400 employees. The case is In re
Barbeques Galore Inc., 08-16036, U.S. Bankruptcy Court, Central
District of California (Woodland Hills).
href='http://www.bloomberg.com/apps/news?pid=20601081&sid=aC1EghBp7X8M&refer=australia'>Read
more.
Fannie Mae, Freddie Mac Stocks
Plunge on Bailout Fears
Share prices of Fannie Mae and Freddie Mac plunged yesterday
amid growing fears that the two largest providers of funding for U.S.
home mortgages won't be able to avoid a government bailout, the Wall
Street Journal reported today. Freddie Mac shares were down 25
percent to $4.39 and Fannie Mae stock dropped 22 percent to $6.15 as
both stocks are down more than 90 percent from a year ago. Many
investors and analysts fear the two companies may not be able to raise
more capital by selling shares, amid gloom over the huge losses they
face on mortgage defaults. Representatives of Fannie and Freddie
reiterated that their capital remains at levels above the minimum
required by their regulator.
href='http://online.wsj.com/article/SB121910280018651259.html'>Read
more. (Subscription required.)