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July 16, 2007
name='1'>House Hearing to Focus on Medical Debt and
Bankruptcy
The House Judiciary
Subcommittee on Commercial and Administrative Law will hold a hearing on
Tuesday titled 'Working Families in Financial Crisis: Medical Debt and
Bankruptcy,' CongressDaily reported on Friday. Witness
list and written testimony to be announced. The hearing will take place
at 1 p.m. ET in 2141
face='Times New Roman' size='3'>Rayburn
size='3'>House
face='Times New Roman' size='3'>Office
size='3'>Building
name='2'>Commentary: Rising Foreclosures Likely to Test
BAPCPA’s Requirements
Rising mortgage
delinquencies are likely to be followed by rising consumer bankruptcies
and, with them, the first big test of the federal bankruptcy reform law
of 2005, according to a New York
Times editorial on Saturday. The new
law’s requirements have already discouraged some hard-pressed
homeowners from seeking bankruptcy court protection, even in the face of
dire circumstances such as spiking monthly payments coupled with job
loss or medical expenses. The chapter 13 process prohibits the
bankruptcy court from modifying the repayment terms of most mortgages on
a primary home. So even under a restructuring plan, bankrupt homeowners
must still repay their mortgages in full or lose their homes. That
lender protection is a holdover from 30 years ago, when mortgage bankers
required ample down payments and most home loans had fixed interest
rates. However, many of the mortgages issued during the housing boom
required little or no down payment and have adjustable rates primed to
go up sharply and rely for their repayment on continued hefty increases
in housing prices rather than on the borrowers’ income. The 2005
bankruptcy reform should have recognized the riskiness of today’s
mortgages by eliminating the outdated lender protection. Congress should
reject the special protection for mortgage lenders by putting mortgages
on the same footing as other secured debt.
href='http://www.nytimes.com/2007/07/14/opinion/14sat1.html?pagewanted=print'>Read
more.
AG Reaches Settlement with Mortgage Company
w:st='on'>
size='3'>Texas
have settled a lawsuit against Ameriquest Mortgage Co., which has agreed
to pay $21 million to borrowers allegedly harmed by deceptive lending
practices, the Austin Business
Journal reported on Friday. The settlement
Friday resolves allegations that Ameriquest and its affiliates, Town and
Country Credit Corp. and AMC Mortgage Services, did not adequately
disclose certain terms to prospective homeowners, according to a
statement from Attorney General Greg Abbott. State officials also
alleged that the company charged excessive loan origination fees and
prepayment penalties, refinanced borrowers into improper loans and
inflated appraisals that qualified borrowers for loans.
About 21,000 Texans who signed
contracts with Ameriquest Mortgage Co. between Jan. 1, 1999, and Dec.
31, 2005, may be eligible to receive the restitution payments, the
attorney general's office says. Eligible consumers will receive
instructions on how to get paid and must file their claims by Sept.
10.
href='http://www.bizjournals.com/austin/stories/2007/07/09/daily39.html'>Read
more.
name='4'>Bankruptcy Looms over Many Elderly
Older Americans
increasingly are being overwhelmed by debt as one expert estimated that
people 55 and older now account for more than 22 percent of those filing
for bankruptcy, up from less than 10 percent in 1994, the Cleveland
Plain Dealer reported on Saturday. Studies show that the debt
burden among the elderly began growing in the early 1990s and has only
worsened since then, according to a
w:st='on'>
size='3'>National
face='Times New Roman' size='3'>Consumer
size='3'>Law
face='Times New Roman'
size='3'>Center
last year. 'More and more people are vulnerable to higher health care
costs,' said David Certner, director of legislative policy for AARP. He
said the elderly are especially at risk because they may have difficulty
getting insurance or having enough to cover their medical needs. He
added that AARP has not studied how people are paying for their health
care, but knows they are taking out second and third mortgages to pay
for long-term care.
href='http://www.chron.com/disp/story.mpl/business/4967412.html'>Read
more.
Global Power Gets Truncated
Exclusivity Extension
The judge overseeing Global
Power Equipment Group Inc.'s chapter 11 proceedings has entered a bridge
order extending the power equipment designer and fabricator's exclusive
rights to file and seek support for a reorganization plan, but stopped
short of granting the lengthier extension Global Power had asked for in
June, Bankruptcy Law360 reported on Friday. U.S. District
Judge Brendan L. Shannon on Thursday signed off on the order pushing the
exclusivity period deadline back to Aug. 22, and extending the exclusive
solicitation period through Oct. 22. When Global Power filed its motion
seeking an extension of its exclusive filing and solicitation rights on
June 8, it asked for extensions through Oct. 1 and Nov. 30,
respectively, and argued that the filing of competing plans could
disrupt Global Power's businesses. Thursday's order says that the new
deadlines are subject to further extension, and also notes that the
unsecured creditors’ committee objected to Global Power's
extension bid. A hearing on the extension bid has been adjourned until
Aug. 22, according to the order.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=29417'>Read
more. (Registration required.)
name='6'>Calpine Trustee Objects to Disclosure
Statement
The U.S. Trustee in the
chapter 11 case of Calpine Corp. has objected to the bankrupt utility's
disclosure statement, saying it doesn't provide sufficient detail about
incentive plans for management and directors, Bankruptcy
Law360 reported on Friday. Calpine had said
that it would adopt a management incentive plan and director equity
incentive plan. However, the objection filed by U.S. Trustee
Diana G. Adams
size='3'>said that despite claims that it is still in the process of
developing the incentive program, Calpine has also said that the
description is contained in the plan supplement and that details of the
plan have not been included. The motion also said that Calpine doesn't
explain why it is requesting
size='3'>nondebtor releases from litigation.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=29385'>Read
more. (Registration required.)
name='7'>Asarco Wants Harbinger Out of Its Records
Mining company Asarco LLC asked
a federal bankruptcy court on Thursday to keep hedge fund Harbinger
Capital Partners out of its confidential records, Bankruptcy
Law360 reported on Friday. Hedge fund Harbinger Capital
Partners is one of several possible sponsors in Asarco's bankruptcy.
Asarco has filed for a protective order, asking the court to allow the
copper producer not to respond to document requests from Harbinger until
the hedge fund signs Asarco's proposed confidentiality agreement. Asarco
claimed in Thursday's motion that all other potential plan sponsors
except Harbinger have signed its confidentiality agreement.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=29407'>Read
more. (Registration required.)
Ford
Is Said to Consider Selling Off Its Volvo Brand
The Ford Motor Company, which
is struggling to reorganize amid record losses and slumping American
sales, has decided to entertain offers for Volvo, the New York
Times reported today. The decision to talk to interested
buyers followed a meeting of Ford directors last week, and comes as Ford
also is trying to sell its two other European luxury brands, Jaguar and
Land Rover. Together with Aston-Martin, the luxury sports carmaker that
Ford sold in March, the brands made up the Premier Automotive Group,
which Ford once thought would generate more than $1 billion a year in
profits. Collectively, Ford could receive as much as $15 billion for all
three car companies, although Volvo, which Ford bought in 1999 for $6.5
billion, may prove more difficult to untangle from its operations. Volvo
was among the wide array of assets that Ford pledged as collateral last
year when it borrowed $23 billion to finance its overhaul program. If
Volvo is sold, Ford will have to repay the value of the loans backed by
Volvo assets, adding pressure on Ford to get as much for Volvo as
possible.
href='http://www.nytimes.com/2007/07/16/business/16ford.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
w:st='on'>
name='9'>Los Angeles
face='Times New Roman' size='3'> Diocese to Pay over $600 Million
to Settle Abuse Claims
Los Angeles Cardinal
Roger Mahony, leader of the nation's largest Roman Catholic archdiocese,
apologized Sunday to the hundreds of people who will get a share of a
$660 million settlement over allegations of clergy sex abuse, the
Associated Press reported yesterday. The deal between the Roman Catholic
Archdiocese of Los Angeles and more than 500 alleged victims of clergy
sexual abuse reached late Saturday is by far the largest payout since
the nationwide clergy abuse scandal emerged in 2002 in
w:st='on'>
size='3'>Boston
latest deal, the archdiocese will pay $250 million, insurance carriers
will pay a combined $227 million and several religious orders will chip
in $60 million. The remaining $123 million will come from litigation
with religious orders that chose not to participate in the deal, with
the archdiocese guaranteeing resolution of those 80 to 100 cases within
five years. The
face='Times New Roman' size='3'>Los
Angeles
insurers and various Roman Catholic orders have paid more than $114
million to settle 86 claims so far.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/07/15/AR2007071500314_pf.html'>Read
more.
name='10'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies lose
money or experience some form of difficulty each quarter.
The business news articles
below are excerpts taken from the most recent Weekly Summary of Troubled
U.S. Companies and Other Business News published by Bastien Financial
Publications.
To begin receiving this
news, each morning, through Bastien Financial
Publication’s DAILY e-Summary, that
emails you information on over 70 such companies each morning, email
steve@creditnews.com your name, company name, address, phone and
fax. We’ll set you up within 24
hours.
The
size='3'>ABI
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size='3'>Indicate “
face='Times New Roman' size='3'>ABI
size='3'>CODE 27” in your email.
size='3'>Ameriquest Mortgage Co. of
size='3'>Orange
now agreed to settle a predatory lending lawsuit by paying more than
480,000 borrowers nationwide $325 million. The company was accused
of not properly disclosing the terms of home loans.
size='3'>Fleetwood Enterprises Inc., the
Riverside, Ca. firm which is one of the nation’s leading RV
and trailer makers with fifteen facilities in the U.S. and Canada,
reported a fourth quarter net loss of $39 million, on a 16% revenue
decline–to $508 million. For the year, the company reported
a net loss of $90 million, on a 17% revenue decline–to $2
billion.
size='3'>Flow International Corp., a
size='3'>Kent
w:st='on'>
size='3'>Wa
makes high-pressure waterjet cutting and cleaning systems, reported a
fourth quarter net loss of $3.1 million, on an 18% revenue decline to
$53.4 million. For the year, the company reported its net declined
50%–to $3.7 million, on a 6% revenue increase–to $217
million.
size='3'>Macy’s Inc., the
size='3'>Cincinnati
retailer, saw its same-store sales decline 2.7% in June, after declining
3.3% in May. In addition, sales at the giant retailer fell short
of expectations for the second consecutive month.
size='3'>Mothers Work Inc., the Philadelphia,
Pa. retailer of maternity wear which operates more than 1500 locations,
reported sales falling short of expectations–to $153 million for
the three months ended 6/30, The company, which is trying to
control costs, had expected sales of as much as $166 million. As a
result of the sales shortfall, quarterly earnings are expected to be no
more than $0.90 per share, down from previously announced estimates of
as much as $1.55 per share. Company shares fell 14% on the
news.
size='3'>Saba Software, a
w:st='on'>
size='3'>Redwood
face='Times New Roman'
size='3'>Shores
firm which develops human capital management software, reported a fourth
quarter net loss of $3 million, on an 11% revenue increase–to
$25.6 million. For the year, the company reported a loss of nearly
$8 million, on a 40% revenue increase–to $100
million.