July 22, 2004
Greenspan Urges Passage of
Some Bankruptcy Reforms
Federal Reserve Chairman Alan
Greenspan on Wednesday urged stand-alone passage of 'netting' provisions
of long-stalled bankruptcy legislation to keep up with the development
of new financial instruments, Reuters reported. 'We have been concerned
for quite a while that the failure to include a number of these newer
instruments into netting legality, if I may put it that way, puts us at
risk in the event that some untoward event which would create
significant financial problems,' Greenspan said in response to questions
from the House Financial Services Committee. Allowing the netting
provisions -- which would describe how debts between parties that
include derivatives can cancel each other out in a bankruptcy proceeding
-- to be held while a broader bankruptcy overhaul is stalled is risky,
he said, the newswire reported.
Democrats Urge FDIC to Nix
Bank/Payday Loaner Partnerships
Several Senate Democrats on Wednesday urged the FDIC to stop allowing
'payday' lending institutions to form partnerships with out-of-state,
FDIC-regulated banks, CongressDaily reported. The senators
said the partnerships allow storefront lenders to evade state
predatory-lending laws. 'Many states have clearly banned the making of
high-interest-rate, short-term loans, but the FDIC's inaction to date is
allowing this kind of exploitive lending to continue,'
face='Times New Roman' size='3'>Banking ranking member Paul Sarbanes
(D-Md.) and Sens. Charles Schumer (D-N.Y.), Hillary Rodham Clinton
(D-N.Y.), Carl Levin (D-Mich.), Richard Durbin (D-Ill.) and Jon Corzine
(D-N.J.) said in a letter to FDIC Chairman Donald Powell.
The senators said payday loans, which borrowers often make against their
anticipated paychecks, have trapped many of their constituents in a
cycle of debt. They noted the Federal Reserve, the Office of the
Comptroller of the Currency and the Office of Thrift Supervision have
prohibited partnerships between banks and payday lenders, and they urged
the FDIC to do the same, the newswire reported.
size='3'>U.S. Bankruptcy Competition Poses Risk, Professors Tell
House
Law professors warned a U.S.
House of Representatives panel about the consequences of
large companies filing for bankruptcy outside of their home states
and judges' eagerness to lure major reorganizations into their
courts, Bloomberg News reported. Competition among bankruptcy courts for
large cases “is changing bankruptcy law and practice in ways
not contemplated by Congress and corrupting those courts,'' Lynn
LoPucki, a University of California at Los Angeles law professor,
said in prepared testimony in Washington. “The competition is
having an adverse effect on reorganizing companies,'' he said. The House
is considering changes to the structure of U.S. bankruptcy lawsamid a
five-year stalemate over proposed revisions. Congress is also
considering a measure that would add 36 new U.S. bankruptcy judges amid
record numbers of filings, the newswire reported.
The House's judiciary panel
subcommittee on commercial and administrative Law yesterday also heard
testimony on asbestos-related bankruptcy cases. “What
has become a weapon of mass business destruction cuts deeper and
deeper into the American industrial process and product distribution
system,'' Lester Brickman, a professor at Benjamin N. Cardozo
School of Law, said in prepared remarks. “If the litigation
continues along its current path, many more bankruptcies will ensue --
scores if not hundreds of companies, big and small, will almost
certainly succumb as will a number of insurance companies,'' Brickman
said. Brickman said companies filing for bankruptcy to cope with
asbestos liabilities also seek favorable courts and trial lawyers
representing injury victims in such cases help drive the
companies' so-called forum shopping, the newswire reported.
size='3'>ENRON
Enron Plan May Be
Blocked
Enron's bankruptcy
reorganization plan encountered a potentially serious roadblock when the
Oregon Public Utility Commission's (PUC) staff recommended blocking the
sale of Enron subsidiary Portland General Electric to Texas Pacific
Group, a Fort Worth private equity firm, the Washington Post
reported. Last week, U.S. Bankruptcy Judge Arthur J. Gonzalez approved
Enron's reorganization plan, which includes the sale of PGE, but the
sale is subject to the approval of Oregon regulators. Bryan Conway, the
PUC case manager, said the PUC staff determined there were too many
unanswered questions about the risks for customers. The matter is not
expected to come to a commission vote until December.
IRS Tipped to Enron Tax
Scheme in 1999 – Witness
An anonymous witness on
Wednesday told a Senate panel he tried in 1999 to tip off the Internal
Revenue Service about a tax shelter he said Enron used to inflate
profits by hundreds of millions of dollars, only to be ignored, Reuters
reported. 'If IRS authorities had pursued the information
back in 1999, the federal government might have seen what was happening
at Enron ... long before there was a total meltdown,' said a witness
dubbed by the Senate Finance Committee as 'Mr. ABC,' at a hearing
looking at how to close the gap between U.S. individual and corporate
taxes owed and what was actually paid. The tax gap was estimated at
about $311 billion in 2001, the newswire reported.
Touch America Creditors
Allowed to Sue Executives
The bankruptcy court overseeing
Touch America Holdings Inc.'s chapter 11 case approved a request by
creditors to sue the company's officers and directors, according to
court papers. According to an order signed Thursday and made available
Tuesday by the U.S. Bankruptcy Court in Wilmington, Del., the company's
panel of unsecured creditors can sue some of Touch America's current and
former officers and directors over the way the company was managed.
Court papers said the creditor panel has been studying various lawsuits
that could be pursued on the company's behalf against the
executives.
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WestPoint Stevens to
Have Revised Business Plan in August
WestPoint Stevens Inc.
is on track to present its revised business plan to its lenders
and the creditors' committee in August and expects to file a chapter 11
plan within the next few months. The textile maker is thus seeking to
preserve its exclusive right to file a plan for another 90 days, through
Oct. 31. In court papers filed Friday, the company said it's in
compliance with the information sharing schedule set forth by the
bankruptcy court in its prior order extending exclusivity.
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Federal-Mogul Names
Miller Interim CEO
Federal-Mogul Corp., an auto
parts maker operating under chapter 11 bankruptcy protection, today
named Robert Miller interim chief executive officer, Reuters reported.
Miller is currently non-executive chairman of the Southfield,
Mich.-based company's board of directors. He replaces Charles McClure,
who resigned to become chairman and CEO of ArvinMeritor Inc., another
auto parts maker. Miller has served as chairman and CEO of Bethlehem
Steel Corp., and has more than 25 years of experience in the automotive
industry, Federal-Mogul said.
Delta Revises Boeing Delivery
Schedule
Delta Air Lines on Thursday said it has agreed with Boeing Co. to
revise its delivery schedule for Boeing 777 and 737-800 aircraft for
2005 through 2009, Reuters reported. The airline said it expects the
changes to reduce its capital spending by nearly $1 billion for 2004
through 2006. Delta, which is trying to cut costs to avoid bankruptcy,
said deferring the aircraft deliveries is part of its plan to 'rebuild
the balance sheet while improving cash flow.'