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November 25, 2005
id='1'>Adelphia Ex-Officer Admits to Filing False Report with
SEC
Former Adelphia Communications Corp. executive Michael J. Rigas
pleaded guilty to making a false entry in Adelphia's records in
connection with a massive fraud at the cable company, Dow Jones Newswire
reported today. By agreeing to plead guilty, Mr. Rigas avoids a retrial,
on 15 counts of securities fraud, that was set to begin early next year.
At a hearing before U.S. District Judge Jed S. Rakoff in Manhattan on
Wednesday, Mr. Rigas, Adelphia's former executive vice president,
admitted that he filed a form with the Securities and Exchange
Commission that falsely stated he had conducted an inquiry into the
source of funds used for a purchase of Adelphia shares in late 1999. 'I
knew it was wrong to sign a certification stating that I had conducted a
reasonable inquiry when I neglected to do so,' he said. Sentencing is
set for March 3. He faces as many as three years in prison on the
charges. Prosecutors said Mr. Rigas filed the SEC form in connection
with the purchase of Adelphia common stock for $1.7 million in late
1999. On the form, he stated the source of the money used to purchase
the shares was personal funds, when it was actually funds from Adelphia,
href='http://online.wsj.com/article/SB113276174049305287-email.html'>Read
more.
In other news, Adelphia Communications announced that it has filed a
Fourth Amended reorganization plan with the bankruptcy court together
with a related amended disclosure statement, BankruptcyData.com
reported. The hearing to consider approval of the disclosure statement
commenced on Oct. 27. The company said it expects to supplement this
filing with additional information about ranges of potential recoveries
based on discussions with constituents.
href='http://www.bankruptcydata.com/BDR.asp?ID=1828'>Read more.
id='2'>New Hampshire Intervenes in Bankruptcy Case
To protect the
rights of laid-off workers, New Hampshire is intervening in bankruptcy
proceedings for a company that abruptly closed its doors last week, Gov.
John Lynch announced yesterday, the Associated Press reported. Attorney
General Kelly Ayotte and Labor Commissioner George Copadis filed an
objection in the U.S. Bankruptcy Court in Delaware to ensure that
employees'
interests are protected before other creditors of Car Components
Technology's parent company, American Remanufacturers Inc. The state
wants the court to reserve $1.4 million to cover potential claims from
workers. American Remanufacturers filed for bankruptcy protection this
month, citing declining sales and increased competition. 'By closing its
doors without warning to employees, this company acted irresponsibly,'
said Lynch. 'CCT workers have already lost their jobs and their health
benefits; they should not also lose the money the company already owes
them' he said. The state's primary objection alleges the company
violated federal law, which requires 60 days notice of mass layoffs and
plant closings, and it seeks to protect the workers' claims to unpaid
wages, accrued and unused vacation time, employer match to 401(k) plans,
amounts withdrawn from pay for 401(k) contributions and other
withdrawals from paychecks. Roughly 560 workers lost their jobs when the
company closed last week.
id='3'>United Losses Continue to Grow Before Exiting Bankruptcy
United Airlines'
holding company reported a $698 million net loss Wednesday for the month
of October, continuing to lose money as it nears the completion of a
nearly three-year-old overhaul in bankruptcy, the Chicago Sun
Times
reported yesterday. UAL said the loss consisted mostly of $584 million
in reorganization expenses that resulted largely from the termination of
its pilots' defined-benefit pension plan. It blamed the rest of the
deficit on a 53 percent rise in fuel prices from October 2004 that
caused the company to spend $169 million more on fuel than it did a year
earlier. The operating loss for the month was $71 million, compared with
$65 million in the same period of 2004. UAL said costs for its mainline
unit, excluding fuel, were down 4 percent while passenger revenue rose 9
percent. The company has now reported net losses of $14.9 billion since
it last turned a profit in the second quarter of 2000, including $5
billion this year and $9.7 billion since it filed for chapter 11
bankruptcy in December 2002.
id='4'>Environmental Services Firm Files for Bankruptcy
Rocked by losses in
its landfill-development operations, an environmental-services company
based in Mount Dora, Fla., filed Wednesday for chapter 11 bankruptcy
protection, the Orlando Sentinel reported yesterday. Handex Group
Inc.
also cited the loss of key oil-company clients and service-station
pollution-cleanup work as contributing to its financial problems. The
landfill operations had resulted in $12 million in losses. The company's
petition to reorganize, filed in federal bankruptcy court in Orlando,
Fla., stated that gross revenue had declined from $91.2 million in 2002
to $61.5 million in 2004. The two key creditors listed were Demco-Venco
Inc. ($17.8 million) and SunTrust Equity Partners (about $6 million).
The filing includes 14 subsidiaries operating in 12 states.
id='5'>Mirant Debtors File Notice with Bankruptcy Court Regarding
MIRMA Leases
Mirant Wednesday
announced that it has filed a notice with the
bankruptcy court regarding the proposed consensual treatment of leases
for its Mirant Mid-Atlantic (MIRMA) subsidiary, according to PR
Newswire. The U.S. Bankruptcy Court for the Northern District of Texas,
Fort Worth Division, approved Mirant's Second Amended Disclosure
Statement on Sept. 30. On Nov. 23, the debtors filed a notice regarding
treatment of MIRMA leases in connection with the second amended joint
chapter 11 reorganization plan. None of the MIRMA owner/lessors and the
MIRMA indenture trustee have agreed to the proposed treatment.
href='http://biz.yahoo.com/prnews/051123/nyw117.html?.v=34'>Read
more.
id='6'>Loral Space Exits Bankruptcy after Shedding $3B in
Debt
Bermuda-based Loral
Space & Communications Ltd., the No. 3 U.S. satellite maker, exited
bankruptcy Tuesday after shedding almost $3 billion in debt during its
28-month case, Bloomberg News reported Wednesday. The company is
emerging chapter 11 protection with $180 million in cash and $126
million in debt. The case concludes four months after U.S. Bankruptcy
Judge Robert Drain confirmed New York-based Loral's plan to fully repay
its suppliers and give unsecured creditors stock in the company.
Shareholders, many of whom opposed the plan, will receive nothing. Loral
filed for protection from creditors in July 2003 after amassing more
than $3 billion in debt during a slowdown in demand for satellites. The
filing followed the collapse of space-based communications ventures such
as Iridium LLC and Teledesic LLC. Bermuda-based Intelsat Ltd. bought six
of Loral's satellites for about $1.03 billion last year. Much of the
bankruptcy case involved a dispute over the value of the company between
Loral and a group of shareholder, who argued that the company's
reorganization plan undervalued Loral. Loral will issue 20 million
shares of new common stock.
id='7'>Mayor of Dodge City, Kan., Won't Resign over Bankruptcy
Filing
The mayor of Dodge
City, Kan., rejected a request by two city commissioners to resign
following his bankruptcy filing, the Associated Press reported
Wednesday. Mayor Terry Lee filed for chapter 7 protection last month,
listing nearly $73,000 in unsecured debt to seven creditors and an
unknown amount to four more. At a meeting this week, two members of the
city commission asked Lee to step down as mayor. Lee says he won't go.
He says if he thought he had done something wrong, he would have
resigned earlier. Commissioner Mike Nelson said he and others are
leaving the decision to Lee, but they still hope he'll give up the
mayor's office.
id='8'>Pension Agency Takes Over Retirement Plans
A federal agency
announced yesterday that it has taken responsibility for two pension
plans covering nearly 2,300 workers and retirees of Falcon Products
Inc., a maker of institutional furniture, the Associated Press reported
Tuesday. One plan is for Falcon Products, the other is for the company's
subsidiary, Shelby Williams Industries Inc., which makes chairs and
other commercial furniture. The Pension Benefit Guaranty Corp. said that
these two companies were among the subsidiaries of St. Louis-based
Falcon Products that filed for bankruptcy protection in January of this
year.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/11/22/AR2005112200875.html'>Read
more.
id='9'>ATA Holdings Collective Bargaining Agreement
Ratified
ATA Holdings
announced that its flight attendants, represented by the Association of
Flight Attendants (AFA), have voted to ratify a new collective
bargaining agreement (CBA), BankruptcyData.com reported Wednesday. The
new agreement will extend wage, benefit and work rule concessions
earlier ratified on Oct. 15, 2004, and will become effective Jan. 1,
2006. The collective bargaining agreement will be amendable on Oct. 31,
2008. 'Reaching this consensual agreement marks yet another significant
accomplishment in strengthening the airline's financial position as we
edge ever closer to successful emergence from chapter 11,' said ATA
CEO and president John Denison. 'By ratifying this agreement, our
flight attendants are demonstrating a faith in this company that has
been displayed by so many of our employees during this difficult
restructuring period.'
href='http://www.bankruptcydata.com/BDR.asp?ID=2268'>Read more.
id='10'>Court Rules Against Calpine in Fight with
Bondholders
A Delaware judge
Tuesday ruled against San Jose, Calif.-based Calpine Corp. in a fight
with holders of its senior bonds over plans to use $852 million in sale
proceeds to buy natural gas to fuel its plants, Dow Jones Newswires
reported Tuesday. Holders of Calpine's notes said the use was improper
and breached terms of their loans to the California energy company. Vice
Chancellor Leo Strine agreed, and barred Calpine from using what is left
of the cash to buy more natural gas. The judge also said a 'fitting and
reasonably prompt restorative remedy is in order' for the $313 million
already spent on natural gas and burned in Calpine's electric generating
plants. But he stopped short of ordering that the cash be immediately
returned to the bondholder trustee, saying he would defer on the proper
remedy. The ruling was in keeping with statements from the judge at a
trial in Delaware last week, when he said he would be reluctant to order
remedies that might force Calpine into bankruptcy.
id='11'>No Credit Counseling Bars 'Sole Proprietor' from Bankruptcy
Court
An individual who
operates a business as a sole proprietorship is not denied legal 'equal
protection' merely because a new bankruptcy law requires credit
counseling for him, but not for corporations or limited liability
companies, a Virginia bankruptcy judge has ruled, FindLaw reported on
Monday. The decision underscores the importance of a person's form of
business in relation to the restrictive credit counseling provisions of
BAPCPA. In this case, Timothy C. Watson, facing imminent eviction from
his leased business premises in Norfolk, Va., filed a chapter 11
petition Oct. 20 in the U.S. Bankruptcy Court for the Eastern District
of Virginia as an individual rather than in the name of his business,
Architectural Stone, and requested temporary exemption from credit
counseling because he allegedly faced 'exigent circumstances' within the
meaning of the new bankruptcy law. Judge Stephen C. St. John found that
Watson's failure to make any attempt to obtain credit counseling was
fatal to his petition.
href='http://news.findlaw.com/andrews/bf/bnk/20051121/20051121watson.html'>Read
more.
id='12'>Clothing Store Bankruptcy Gets Approval
A U.S. Bankruptcy
Court in Albany, N.Y., approved a reorganization plan for Christopher's
Men's Stores that will allow the company to continue operating at
Crossgates Mall and other locations, The Albany Business Review
reported Wednesday. The Albany men's clothing store, which is headed by
Vincent Rua and Les Schwartzberg, had filed for bankruptcy in March,
citing debts of $3.2 million. Under the reorganization, Christopher's
Men's Stores will continue to operate its five existing stores. The
bankruptcy allows the company to receive $450,000 in new investment.
id='13'>Bankruptcy Spike Before Change Spurs Q4 Credit Card
Write-offs
One early impact
of the 2005 bankruptcy reform law is that more credit card portfolios
are turning red, at least for a little while, Investors Business
Daily
reported Wednesday. Last week, American Express and Wells Fargo became
the latest banks to warn that a jump in consumer loan losses would hurt
fourth-quarter earnings, blaming the increase in bad loans on a record
surge in personal bankruptcy filings in the weeks leading up to Oct. 17,
when the new law went into effect.
href='http://www.investors.com/editorial/IBDArticles.asp?artsec=16&issue=20051123'>Read
more.
id='14'>Banks Having Good Year; No Failures So Far
This could be a record-breaking year for bank failures, the
Sarasota Herald-Tribune reported. As in none. Through Nov. 17,
not a single U.S. bank or thrift has failed in 2005. If that holds for
the remaining six weeks of the year, it would be the first time since
the creation of the Federal Deposit Insurance Corp. in 1934 that no
financial institution has gone under. It has been 16 months since the
last failure, a small bank in Ephraim, Utah. 'The lack of failures is
just an indicator of how healthy the banking industry as a whole is,'
said David Barr, spokesman for the FDIC. Many of the weak players have
been weeded out over the years, either through mergers or regulatory
closures. There are more than 3,000 fewer FDIC-insured institutions
today than 15 years ago, a 25 percent decline. 'There's a tremendous
amount of consolidation going on in the industry,' Barr said. 'Even
banks that are not well off financially are still able to find buyers.'
Despite a slowdown in revenue growth, the U.S. banking industry
continues to post huge profits.
href='http://www.theledger.com/apps/pbcs.dll/article?AID=2005511230373'>Read
more.
International
id='15'>Canadian Bill C-55 Passed by the House of Commons
The Canadian House
of Commons has passed a bill (Bill C-55) that contains comprehensive
amendments to Canada's two major insolvency statutes, the Bankruptcy and
Insolvency Act, and the Companies Creditors Arrangement Act. This has
been a very fast process by Canadian legislative standards. The reason
for this is that it is expected that there will be a vote of non
confidence which will have the support of the majority of the members of
the House of Commons next week (the Liberal Party has a minority of
seats in the House of Commons). All of the major political parties are
cooperating to get the bill passed before the government falls and an
election is called. This is mainly due to fact that the bill contains
provisions creating a wage earner protection plan in insolvencies, which
is a sensitive political issue. However, there are other broad reaching
amendments in the bill in diverse areas including collective bargaining
agreements, executory contracts, sale of assets, liability of court
officers, aircraft leasing, receiverships, pensions, DIP financing,
reviewable transactions, preferences, equity interests, corporate
governance, as well as provisions similar to the recent chapter 15
amendments
in the United States. C-55 passed third reading on Nov. 21 in the house
of Commons with one amendment. It is expected that the bill will receive
fast track Senate approval by the end of this week and Royal Assent by
Monday Nov 28. Assuming the bill receives Royal Assent on Monday, the
majority of the amendments will not become effective until a date to be
set by the Governor in Council, which is predicted to be at least
several months away, in order to permit time for the new required
regulations to be drafted.