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November
20, 2007
name='1'>Bankruptcy Filings Through First Three Quarters of 2007
Eclipse Last Year's Totals
The 623,399 total U.S.
bankruptcies filed during the first three quarters of 2007 (Jan. 1
– Sept. 30) represented a 40.16 percent increase over the 444,789
cases filed over the same period in 2006, according to data released
yesterday by the Administrative Office of the U.S. Courts. The totals
for both consumer and business filings during the first three quarters
of 2007 also eclipsed those reached for the full calendar year of 2006.
“Bankruptcies are up sharply from a year ago this period,
reflecting a growing vulnerability in household economics,” said
ABI Executive Director Samuel J. Gerdano.
“The continued stress on the housing market will
likely fuel a continuation of this trend into 2008.” Filings by
individuals or households with consumer debt increased 40.15 percent to
603,139 for the nine-month period ending Sept. 30, 2007, from 430,364
filings during the same period in 2006. Business filings for the
nine-month period ending Sept. 30, 2007, totaled 20,260, representing a
40.45 percent increase over the similar nine-month 2006 total of
14,425.
href='http://www.abiworld.org/AM/Template.cfm?Section=Home&CONTENTID=49780&TEMPLATE=/CM/ContentDisplay.cfm'>Click
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Housing/Mortgage
Lending
name='2'>AHM, Credit Suisse Settle Adversary
Proceeding
Bankrupt lender American
Home Mortgage Holdings Inc. requested bankruptcy court approval for a
settlement agreement with Credit Suisse First Boston Mortgage Capital
LLC, which would put to rest a pending adversary proceeding between the
two companies,
size='3'>Bankruptcy Law360 reported yesterday.
CS Mortgage had filed the adversary proceeding against AHM soon after
the lender filed for chapter 11 in August. The financial services
company sought declaratory judgment of its rights under a number of
repurchase and servicing agreements it had signed with AHM pre-petition.
According to AHM, it still owed CSFB and its subsidiaries over $5
million when it filed for bankruptcy. AHM later filed an answer and
counterclaim to CS Mortgage’s adversary complaint, questioning the
rights asserted by the company in its complaint.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=40470'>Read
more. (Registration required.)
name='3'>Freddie Mac Reports $2 Billion Loss in Third
Quarter
Freddie Mac's
third-quarter net loss sharply widened amid soaring credit losses and
warned it needs more capital and might have to slash its dividend, amid
other possible actions, the
size='3'>Wall Street Journal reported today.
In the third quarter, the McLean,
w:st='on'>
size='3'>Va., firm
reported a net loss of $2 billion, or $3.29 a share, versus $715
million, or $1.17 a share a year ago. The latest quarter's results
included credit-loss provisions of $1.2 billion, versus $112 million a
year earlier, and mark-to-market losses of $2.7 billion, versus $1.5
billion a year ago. Losses on some credit guarantees - wherein the
company promises to repay the interest and principal of a securitized
loan if a borrower defaults - amounted to $396 million, versus $103
million in the prior year. Losses on purchased loans rose to $483
million versus $30 million a year earlier. The mortgage financier said
its estimated regulatory core capital is almost below the regulatory
minimum of 30 percent. In order to keep it from falling below that, it
has engaged Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc.
to help consider 'very near-term capital-raising alternatives.'
href='http://online.wsj.com/article/SB119556248413999149.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
name='4'>Homebuilders Look to Avoid Bankruptcy
Homebuilders such as
Dallas-based Centex Corp. and Pulte Homes Inc. aim to survive an
industrywide unraveling by selling houses at bargain prices, slashing
jobs and scrapping growth plans, the Associated Press reported
yesterday. Builders constructed more than 2 million housing units
nationwide in 2005, the year the boom peaked. So far this year, housing
starts have fallen to an annual rate of 1.2 million units through
September, and economists expect the number to drop to an annual rate of
1 million by mid-2008. Some analysts foresee a shakeout similar to that
of the early 1990s when numerous builders went through bankruptcy,
including
size='3'>Reston
and U.S. Home Corp. of
size='3'>Houston, now part of
size='3'>Miami's Lennar
Corp. Developers are reeling from sharp increases in loan defaults,
which are forcing lenders to be far more cautious about new
mortgages.
href='http://www.foxcarolina.com/money/14642650/detail.html'>Read
more.
name='5'>Bankruptcy Adviser L. Tersigni Consulting Files Chapter
11
L. Tersigni Consulting,
which advised asbestos creditors in more than a dozen major bankruptcy
cases, has filed for chapter 11 protection in
w:st='on'>
size='3'>Connecticut
size='3'>, Dow Jones
Daily Bankruptcy Review reported today. The
filing came as federal bankruptcy monitors prepared to appoint an
examiner to investigate claims that the firm’s deceased leader,
Loreto Tersigni, improperly inflated bills. An investigation by the U.S.
Attorney’s Office in
w:st='on'>New
Jersey
year did not produce charges against Tersigni, who died in May.
Professionals at the Tersigni firm who became suspicious that bills
submitted to bankruptcy courts for approval weren’t correct
brought the matter to the attention of federal authorities. The
bankruptcy courts have begun their own investigation of L.
Tersigni’s bills, by authorizing the appointment of an examiner by
the U.S. Trustee’s Office. Over the years, L. Tersigni billed
millions to companies such as Owens Corning, Federal-Mogul Corp., W.R.
Grace & Co. and others that had resorted to chapter 11 in an effort
to resolve billions in damages stemming from their asbestos
products.
name='6'>Alaskan Diocese Mulls Bankruptcy Filing
The Fairbanks Catholic
Diocese is pondering filing for chapter 11 after a $50 million Jesuit
settlement for more than 100 Alaska Native sexual abuse victims leaves
the diocese with approximately 150 clerical sexual abuse claims
unresolved, the
size='3'>Fairbanks Daily Miner reported today.
More than a year ago, the diocese took on extra counsel, hiring a
size='3'>Tucson
w:st='on'>
size='3'>Ariz.
for settlement litigation as well as reorganization
advice. Last summer,
the diocese withdrew from mediation with the victims’ lawyers when
the two sides couldn’t find common ground for a
settlement. Read
more.
name='7'>Calpine Looks to Pay $66.6 Million to Employees under
Incentive Program
Calpine Corp. said that
it wants to pay Chief Executive Robert P. May a bonus worth $10.9
million when it exits chapter 11 protection under an incentive program
that would pay a total of $66.6 million to 2,200 employees, the
Associated Press reported yesterday. Under the incentive plan, detailed
in a Friday filing with the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
would hand out about 1.3 percent of its new common stock to its
employees upon emerging from bankruptcy. Another 1.7 percent of the
stock would be held for annual grants by the company's board of
directors. Calpine said the stock awards issued when it emerges from
bankruptcy protection will total about $66.6 million. The power company
is working to exit chapter 11 by the end of January to avoid losing an
$8 billion financing package negotiated before the recent credit crunch
complicated companies' efforts to obtain bankruptcy-exit
financing.
href='http://www.chron.com/disp/story.mpl/ap/fn/5313896.html'>Read
more.
w:st='on'>
name='8'>Washington
face='Times New Roman' size='3'> Boat Builder Files for
Bankruptcy
Nichols Brothers Boat
Builders Inc., the Whidbey Island,
w:st='on'>
size='3'>Wash.
tugboats and ferries, has filed for bankruptcy protection from
creditors, the Bloomberg News reported yesterday. Nichols Brothers
listed debts of $43.9 million and assets of $3.41 million in a Friday
reorganization petition in U.S. Bankruptcy Court in
w:st='on'>
size='3'>Seattle
its largest creditor is Hornbeck Offshore Services LLC, which holds a
$20 million claim and had sued Nichols Brothers last year over a
contract dispute. Nichols Brothers had revenue of $6.86 million in 2007,
compared with $23.6 million in 2006 and $35.7 million in 2005, company
President Bryan Nichols said in court papers.
href='http://seattlepi.nwsource.com/business/340345_nichols20.html?source=rss'>Read
more.
name='9'>Cerberus Sued over Collapsed Deal with United
Rentals
United Rentals sued
Cerberus over their failed buyout deal, which will likely lead to the
postponement of the $4 billion sale of loans tied to Cerberus's purchase
of Chrysler, the Wall
Street Journal reported today. Cerberus
declined to explain why it backed away from United Rentals, and its not
yet known what the fate of a $4 billion sale of bank loans tied to the
Chrysler deal will be, which was to take place this week. Investments in
the subrprime market have also been a drag on Cerberus finances. Last
year, when Cerberus led a consortium of investors to acquire for $14
billion a 51 percent stake in the GM unit, the profits made by GMAC's
mortgage arm helped make it a solid contributor to GM's bottom line.
This month, GMAC Financial Services posted the largest quarterly loss in
its 88-year history because of a $2.3 billion third-quarter loss at
Residential Capital, LLC, its home-lending unit known as ResCap.
Investors and analysts say Cerberus, as well as GM, would have to step
up with more capital to keep the mortgage business afloat.
href='http://online.wsj.com/article/SB119548555448497925.html?mod=us_business_whats_news'>Read
more. (Registration required.)
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