Downturn Drags More
Consumers into Bankruptcy
The economy’s deep troubles are pushing a growing
number of already struggling consumers into bankruptcy, often with far
more debt than those who filed in previous downturns, the
face='Times New Roman'>New York

Times reported yesterday. Plummeting home
values, dwindling incomes and the near disappearance of credit have
proved a potent mixture. While all the usual reasons that distressed
borrowers seek bankruptcy — job loss, medical bills, divorce
— play significant roles, new economic forces are changing the
calculus of who can ride out the tough times and who cannot. The number
of personal bankruptcy filings jumped nearly 8 percent in October from
September, after marching steadily upward for the last two years, said
Mike Bickford, president of Automated Access to Court Electronic
Records, a bankruptcy data and management company.
face='Times New Roman'>Robert
M. Lawless, a professor at the University of
Illinois College of Law, pointed to the tightening of credit by banks as

a significant factor in the October increase. As banks have pulled back
on lending, he said, consumers have been finding it more difficult, and
in many cases impossible, to use credit cards, refinance their home
mortgages or fall back on their home equity lines to get them through a
rough period. 

href='http://www.nytimes.com/2008/11/16/business/16consumer.html?_r=1=print'>Read

more.

Facing Deficits, States Get
Ready to Make More Budget Cuts

A majority of states — many with budgets already

full of deep cuts and dependent on raiding rainy-day funds or tax
increases — are scrambling to find ways to get through the rest of

the year without cutting vital services or raising taxes, the

size='3'>New York Times reported today.
Lawmakers in California struggled two months ago to close a $15 billion
hole in the state budget. Now the state faces an additional $11 billion
shortfall and may be unable to pay its bills this spring. Some
governors, including Arnold Schwarzenegger (R-Calif.) and David A.
Paterson (D-N.Y.), have called special legislative sessions to deal with

the crisis. Others are demanding hiring freezes and across-the-board
cuts. A few states are finding their unemployment insurance funds
running dry, just as the number of out-of-work residents is beginning to

increase. 

href='http://www.nytimes.com/2008/11/17/us/17fiscal.html?_r=1&hp=&oref=slogin&pagewanted=print'>Read

more.

Consumers' Credit Card
Limits Slashed as Companies Try to Reduce Risk

Lenders are taking a wide range of steps, including
cutting consumers’ credit card limits, to mitigate their risk as
unemployment rates tick up and the number of delinquent borrowers grows,

the
size='3'>Washington Post reported yesterday.
Besides cutting credit limits, card companies are raising rates and
fees, and suspending offers such as zero percent balance transfers. They

are also making rewards programs less rewarding and shutting down
inactive accounts, industry analysts and watchdogs said. The
retrenchment, which follows years of lavishing Americans with offers and

ever-increasing limits, is squeezing consumers at a time when they have
already lost other avenues for borrowing, such as home equity lines of
credit. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2008/11/15/AR2008111500216_pf.html'>Read

more.

Autos

Auto-Parts Makers Push
for Aid

Auto-parts makers are requesting access to the
government's $700 billion financial-industry rescue fund, and Democratic

lawmakers are planning tough conditions -- including a government
oversight board -- on a proposed aid package for Detroit's troubled auto

companies, the

size='3'>Wall Street Journal reported today.
Democratic lawmakers today plan to unveil a bill that would give the Big

Three auto makers access to the $700 billion Troubled Asset Relief
Program (TARP) set up in October. The Motor and Equipment Manufacturers
Association is sending a letter today to Congress that will request that

its members get equal access to TARP funding sought by the car
makers. 
href='http://online.wsj.com/article/SB122688332554232113.html'>Read
more. (Registration required.)

Seeking Aid, Automakers
Have a Friend in the UAW

When Ron Gettelfinger, president of the United
Automobile Workers union, appears this week at congressional hearings to

help make the case for the
w:st='on'>Detroit
size='3'>automakers getting emergency federal aid, he will be making the

case that if one company fails, all three will suffer, the
face='Times New Roman'>New York

Times reported today. The union’s
membership at General Motors, Ford Motor Co. and Chrysler has been
nearly halved to 139,000 workers in the past three years, and it
continues to shrink with every new plant closing. When Gettelfinger and
the leaders of Detroit’s Big Three speak at the Senate Banking
Committee on Tuesday, he is likely to warn that a bankruptcy by any of
the three companies in Detroit would wipe out the rest of them.
“It’s not just GM going bankrupt,” Gettelfinger said.
“It’s all the rest of the industry that goes with it. Two of

the three companies would go under, and there’s a high probability

all three would go.” 

href='http://www.nytimes.com/2008/11/17/business/economy/17uaw.html?ref=business&pagewanted=print'>Read

more.

If One of Detroit’s

Big Three Falls, Foreign Makers Could Be Buffer

Many auto industry experts and economists say the
failure of one or more of
size='3'>Detroit’s Big Three
automakers would put a huge initial dent in American manufacturing, but
in time foreign car companies would pick up the slack by stepping up
production in the
w:st='on'>United
States,
the
size='3'>New York Times reported today.
Experts say that the big foreign makers are established enough to take
control of the industry and its vast supplier network more quickly than
is widely understood. The transition to that new equilibrium would be
complicated as the American companies employ about 240,000 workers, and
their suppliers an additional 2.3 million, amounting to nearly 2 percent

of the nation’s workforce. The outright failure of General Motors
would eliminate the biggest auto employer and more than 100,000
manufacturing jobs.

href='http://www.nytimes.com/2008/11/17/business/economy/17impact.html?ref=business&pagewanted=print'>Read

more.

Commentary: Why
Bankruptcy Is the Best Option for GM

General Motors should be allowed to go bankrupt and
reorganized as it is caught in a web of business relationships designed
for another era, according to a commentary in today’s

face='Times New Roman'>Wall
Street Journal. After 42 years of eroding U.S.

market share (from 53 percent down to 20 percent) and countless
announcements of 'change,' GM still has eight U.S. brands (Cadillac,
Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its
more successful competitors, Toyota (19 percent market share) has three,

and Honda (11 percent) has two. GM has about 7,000 dealers, while Toyota

has fewer than 1,500 and Honda has about 1,000. These fewer and larger
dealers are better able to advertise, stock and service the cars they
sell. GM knows it needs fewer brands and dealers, but the dealers are
protected from termination by state laws. This makes eliminating them
and the brands they sell very expensive. It would cost GM billions of
dollars and many years to reduce the number of dealers it has to a
number near Toyota's. Foreign-owned manufacturers who build cars with
American workers pay wages similar to GM's, but their expenses for
benefits are a fraction of GM's. 
href='http://online.wsj.com/article/SB122688631448632421.html'>Read
more. (Registration required.)

Banks Lending Isn't Easing
the Crisis

Despite criticism from lawmakers and regulators, the
Federal Reserve reported that banks are actually lending at record
levels as commercial and industrial loans, at $1.6 trillion in early
November, were up 15 percent from a year earlier and grew at a 25
percent annual rate during the past three months, the
face='Times New Roman'>Wall
Street Journal reported today. Home-equity
loans, at $578 billion, were up 21 percent from a year ago and grew at a

48 percent annual rate in three months. The numbers point to one of the
great challenges of the crisis. Banks are lending, but they're also
under serious strain as they act as backstops to a larger problem -- the

breakdown of securities markets. 
href='http://online.wsj.com/article/SB122687263983431709.html'>Read
more. (Registration required.)

Chamber of Commerce Calls
for Credit Agency Regulations

The U.S. Chamber of Commerce on Friday called for the
regulation of credit ratings agencies as part of its proposals to
modernize regulations of the financial system,

face='Times New Roman' size='3'>CongressDaily
size='3'>reported. The proposals were part of a seven-point regulatory
modernization blueprint issued by the Chamber as leaders of the world's
20 largest industrial nations prepared to take part in weekend meetings
here on the global financial crisis. Chamber officials said they
supported 'responsible regulation' designed to eliminate conflicts of
interest and improve the professionalism of the credit rating agencies,
which include Standard and Poor's, Moody's Investors Service. and Fitch
Ratings. 'They were not the cause of the credit crisis but they did not
serve their purpose as intended,' said Chamber Executive Vice President
David Chavern. Along with David Hirschmann, head of the Chamber's Center

for Capital Markets Competiveness, Chavern urged the extension of
government oversight to other unregulated areas including markets for
securitized mortgage products and financial derivatives like credit
default swaps, the toxic debt instruments that played a key role in the
recent collapse of insurance giant American International Group. 

href='http://www.uschamber.com/ccmc/default'>Click here to read

the regulatory proposals by the U.S. Chamber of
Commerce.

California County Sues
Lehman Execs over $150 Million Loss

San Mateo
County,
w:st='on'>Calif.
size='3'>, sued executives of Lehman Brothers Holdings Inc. for alleged
misstatements about the investment bank's financial health, leading to a

$150 million loss for the county after Lehman's collapse,
face='Times New Roman'>
size='3'>Bankruptcy Law360 reported on Friday.

The San Mateo County Investment Pool, which funds public agencies and
school districts, sued the Lehman executives for fraud Thursday in the
Superior Court of the State of California, County of San Francisco. The
158-year-old Lehman filed the largest chapter 11 bankruptcy in history
in September, reporting assets of $639 billion and debts of $613
billion. San Mateo says that the company's involvement with real estate
investments amid the subprime mortgage meltdown led to its
collapse. 
href='http://bankruptcy.law360.com/articles/76796'>Read
more. (Subscription required.)

Alitalia Keeps Creditors
at Bay

Bankruptcy Judge

face='Times



















New










Roman'

size='3'>Burton R. Lifland on Thursday granted

a preliminary injunction prohibiting creditors from seizing, enforcing
or executing liens or judgments against Alitalia's assets in the United
States pending a hearing on its chapter 15 petition,

face='Times New Roman'>
size='3'>Bankruptcy Law360 reported on Friday
According to Alitalia's petition, the property at issue consists of cash

in its operating bank accounts, furniture and fixtures in its various
offices and facilities throughout the country and is valued at about $1
million. The hearing on the petition is scheduled for Nov. 25. 
href='http://bankruptcy.law360.com/articles/76958'>Read more.
(Subscription required.)

Discount Retailer to Sell
or Liquidate Before Thanksgiving

Bankruptcy Judge

face='Times



















New










Roman'

size='3'>Mary F. Walrath on Thursday approved
$7 million in debtor-in-possession financing for NWL Holdings Inc., the
parent company of discount retail chain National Wholesale Liquidators,
which calls for the company to sell or liquidate before
Thanksgiving,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported on Friday. Judge Walrath also approved motions that
will allow National Wholesale Liquidators to jointly administer the
chapter 11 proceedings for its more than 60 affiliates that filed for
protection at the same time. As part of the debtor-in-possession
financing agreement, National Wholesale Liquidators has agreed to either

find a buyer or liquidate all its assets by Nov. 26. Judge Walrath gave
the discount retailer an extra 15 days to file its schedules of assets
and liabilities, extending the deadline to 45 days, according to court
filings. Read

more. (Subscription required.)

Hawaiian Telcom Hints at
Bankruptcy Filing if Debt Talks Fail


Hawaiian Telcom Inc. has warned that it may be forced to
file for bankruptcy reorganization if it can't reduce its debt load,
the
size='3'>Honolulu Advertiser reported on
Sarurday. Hawaii's largest telephone company said in a Securities and
Exchange Commission filing on Friday that it has been in talks with its
bank lenders and bondholders to convert debt into stock. Hawaiian Telcom

has about $1 billion in debt, which includes $574.5 million in bank
loans and about $500 million in bonds. The debt helped finance
Washington, D.C.-based The Carlyle Group's $1.6 billion takeover of the
local phone company in 2005. Earlier this month, Hawaiian Telcom
postponed a $26 million interest payment due to bondholders. It instead
opted for a 30-day grace period to give itself time to negotiate with
creditors to restructure the debt, which expires Dec. 1. 

href='http://www.honoluluadvertiser.com/article/20081115/NEWS01/811150357/1001'>Read

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