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June 21, 2007
name='1'>Calpine Files Reorganization Plan
Big power generator Calpine Corp. said it believes it will have
sufficient resources to pay all secured creditors and all or most
unsecured claims when it emerges from its chapter 11 case at the end of
the year, the Wall Street Journal reported today. In its
reorganization plan filed with the U.S. Bankruptcy Court for the
Southern District of New York yesterday, Calpine said it expects the
company's reorganization value, after dismissing certain claims, to be
about $21.7 billion. That would be sufficient to pay all creditors and
give common shareholders stock valued at $1.80 a share. If paid claims
are lower, the stock value could rise as high as $3.50 a share.The
company has eliminated about a third of its creditor claims in the
bankruptcy proceeding and has cut staff by a third. It had roughly $18
billion in debt at the time of its bankruptcy filing in December 2005,
and is expected to emerge from court proceedings with about $11 billion
in debt.
href='http://online.wsj.com/article/SB118238356803442725-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>Read
more. (Registration required.)
name='2'>Student Loan Overhaul Advances
Democrats in Congress are pushing to
overhaul the nation's student loan system with legislation that would
cut federal subsidies to lending companies by as much as $19 billion,
channel most of those savings to student aid and ease repayment rules
for borrowers, the Washington Post reported today. The Senate
education committee overwhelmingly approved its version of the
legislation yesterday, one week after the House education panel took
similar action. Senior Democrats predicted that the bills would come to
a vote by the end of next month and would be reconciled without
significant difficulty. 'This legislation will help reverse the crisis
in college affordability,' said Sen. Edward M. Kennedy (D-Mass.),
chairman of the education committee. 'It will restore balance to our
broken student loan system by reducing unnecessary lender subsidies.'
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/06/20/AR2007062002488.html'>Read
more.
Delphi, UAW Near to
Accord on Wages
Workers at Delphi Corp.’s plant in
Lockport, N.Y., will have a major say in any deal to reduce the bankrupt
company’s labor costs — a deal that is reportedly close, The
Buffalo (New York) News reported today. The autoworkers union at the
Niagara County plant is the largest among the auto parts maker’s
U.S. operations, a union official said. The UAW and Delphi are close to
agreement on a deal that would drop seniority workers’ pay in
return for an up-front bonus. A deal on pay would remove a stumbling
block that has dragged on Delphi’s reorganization since it filed
bankruptcy in 2005. It would also remove the threat of a strike that
would quickly halt production at General Motors, the former parent of
Delphi and by far its largest customer.
href='http://www.buffalonews.com/145/story/103458.html'>Read
more.
Airlines
name='4'>American Airlines Pilots Oust Union President
Pilots at American Airlines
in Dallas, unhappy over pay and angry at company management, ousted
their union's top officers and elected a slate of newcomers who promised
to take a harder line against the nation's largest carrier, the
Associated Press reported today. Miami-based pilot Lloyd Hill defeated
incumbent President Ralph Hunter by more than a 2-to-1 margin in a
runoff, and challengers also unseated the Allied Pilots Association's
next two ranking officials. Hill said immediately that the union's
proposal for a 30.5 percent pay increase next year 'is not nearly
enough.' The first test for the new officers will come quickly—the
union is in the early stages of negotiations for a new contract in which
it expects large raises. In an interview Wednesday night, Hill said he
wants the company to succeed but current union leaders had tried too
hard to find a middle ground with management.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/06/21/AR2007062100014.html'>Read
more.
name='5'>Pension Relief for Airlines Faulted by Some
Legislators
A pension measure inserted into last month’s Iraq war spending
bill is causing some leading members of Congress to complain that
American Airlines got a break worth almost $2 billion without proper
scrutiny, the New York Times reported today. The measure will
allow American to greatly reduce its payments into its pension fund over
the next 10 years. At the end of 2006, the fund had assets of $8.5
billion and needed an additional $2.5 billion to cover all its
obligations. The new provision will allow American to recalculate those
numbers, so that the shortfall disappears and the plan looks fully
funded. Continental, along with a small number of regional airlines and
a caterer, will also be able to take advantage of the provision.
American sought relief, it said, because two big rivals that went into
bankruptcy, Delta and Northwest, had received special breaks in sweeping
pension legislation enacted last year. That gave them what American
considered a competitive advantage.
href='http://www.nytimes.com/2007/06/21/business/21pension.html?ref=business&pagewanted=print'>Read
more.
name='6'>Airbus Wins $1.9 Billion Order from Colombia's
Avianca
Airbus SAS, the world's
largest maker of commercial aircraft, won a $1.9 billion order for 19
planes from Avianca SA, Colombia's largest airline, as the carrier seeks
to expand services, Bloomberg News reported today. Avianca, based in
Bogota, agreed to buy 14 A320 series planes and five A330-200s, Airbus
said today. The agreement, a conversion of options to firm contracts,
brings total firm orders from Avianca to 57. Avianca is buying new
aircraft to expand service after the airline was acquired in 2004 by
Brazil's Synergy Group in a plan to emerge from bankruptcy. The airline
said on March 28 it would pay $1.5 billion for 10 Boeing Co. 787
Dreamliner aircraft and took options to buy 10 more. The $1.9 billion
value of the contract is at list prices. Airlines generally get
discounts for large orders.
face='Times New Roman' size='3'>Newman Claim
Rejected
A legal claim filed by the Newman
Foundation of Oregon State University to prevent the Archdiocese of
Portland from selling a valuable piece of property in Corvallis, Ore.,
was rejected this week by federal bankruptcy judge Elizabeth Perris, the
Corvalis Gazette-Times reported today. The foundation wanted a
hearing to explain why it had a legal interest in the site where the
Newman Center Catholic student ministry is located. But less than 30
minutes after both sides’ lawyers and half a dozen Newman board
members filed into a downtown Portland, Ore., courtroom, Perris rejected
the foundation’s request. Perris was involved in the case because
the foundation had filed its claim as part of the archdiocese’s
bankruptcy proceedings. The 0.9-acre parcel of land, worth about $2.8
million, is slated to be sold within two years, according to the
archdiocese’s reorganization plan approved two months ago by
Perris.
href='http://www.gazettetimes.com/articles/2007/06/21/news/community/4loc01_newman.txt'>Read
more.
Web
Site in Court over Simpson Book
Lawyers for the family of Ron Goldman and a bankruptcy trustee said
that celebrity gossip Internet site TMZ.com should be held in contempt
for posting a manuscript of O.J. Simpson's book “If I Did
It,” the Associated Press reported today. The Web site and its
lawyer said that the company did nothing wrong and that the manuscript
was posted only briefly, though excerpts remained on the site yesterday
afternoon. U.S. Bankruptcy Judge Jay Cristol said that
he would schedule a hearing later on whether to hold TMZ in contempt and
suggested that the company—a joint venture between America Online
Inc. and a Time Warner Co. subsidiary—could eventually be held
financially liable for any violation. Simpson said yesterday that he had
nothing to do with Miami-based TMZ's posting of the manuscript.
Citing assets of $53,923 and debts of
$7.6 million, DOBI Medical International Inc. has filed for bankruptcy
protection, NorthJersey.com reported today. The Mahwah, N.J.-based
medical-device maker, which furloughed all of its workers a year ago,
has been developing an imaging machine intended to improve doctors'
ability to diagnose breast cancer. Bankruptcy papers were filed last
week in federal court in Newark, N.J. A list of DOBI's 20 largest
creditors contained in court papers included Phillip Thomas of Kinnelon,
who is owed $280,000; Marcon Mahwah LLC, $100,000; and Frank Puthoff of
Mahwah, $80,000. Read more.
href='http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXk3NDImZmdiZWw3Zjd2cWVlRUV5eTcxNTUwMTYmeXJpcnk3ZjcxN2Y3dnFlZUVFeXkyMg'>Read
more.
name='10'>Music Mogul Arrested in Bali
Lou Pearlman, the impresario
who formed the Backstreet Boys and N’ Sync, has been arrested and
has agreed to return to Florida to face federal bankruptcy charges,
EZ-Tracks Music News reported today. Pearlman, 53, was
arrested in Indonesia last week on one count of bank fraud. He was
expelled from the resort island of Bali after the FBI contacted
authorities there, then transferred to U.S. custody and flown to Guam.
The former music mogul is accused of fraudulently securing nearly $20
million in bank loans with documents from a made-up accounting firm. The
criminal complaint against him was filed in March and unsealed last week
after authorities found him. Pearlman ignored court actions against him
for months as all of his assets were liquidated in two bankruptcy cases
against him and his companies. Florida investigators separately accuse
Pearlman of bilking more than 1,000 individual investors out of more
than $315 million in a long-running Ponzi scheme. Several banks say he
collectively owes them more than $120 million, according to bankruptcy
court documents.
name='11'>Le-Natures Files Reorganization Plan
Le-Natures' unsecured creditors’, secured lenders’ and
senior subordinated noteholders’ committes filed a chapter 11 plan
and related disclosure statement yesterday, BankruptcyData.com reported
today. No hearing date was scheduled to consider approval of the
disclosure statement, but the Court is scheduled to consider Wachovia
Bank's motion seeking an order converting the case back to chapter 7
liquidation status on June 26. The company consented to a voluntary
chapter 11 filing on November 3, 2006, following the filing of an
involuntary chapter 7 filing against the Company by creditors General
Press Corp., Lyons Contracting, M.I. Friday and Jackel Development.
name='12'>Harley Supplier Files for Bankruptcy
Converse Industries Inc., a precision machining firm, petitioned for
reorganization under chapter 11 earlier this month, the Milwaukee
Journal-Sentinel reported today. Converse owes its 20 largest
unsecured creditors about $9.3 million, with about $3.3 million of that
secured by company-owned collateral, Converse provides machined parts
for most of Harley's model groups. Sales to Harley generate over 70
percent and Converse's relationship with Harley dates to the 1990s, when
Converse acquired another company that had been supplying the motorcycle
builder since 1980.
href='http://www.jsonline.com/story/index.aspx?id=622927'>Read
more.
name='13'>Bear Stearns Staves Off Collapse of 2 Hedge
Funds
Several lenders, including JP Morgan Chase, Goldman Sachs and Bank of
America, reached deals yesterday with Bear Stearns that forestalled a
need to sell the mortgage securities in the open market, the New
York Times reported today. It appeared that some lenders pulled
back over concerns about the effect that a large liquidation would have
on bond prices and investor confidence. While the securities involved
represent a fraction of the market, a liquidation could have forced a
bigger sell-off while setting a lower price. One lender, Merrill Lynch
& Company, moved ahead with plans to auction $850 million in
collateral it had seized from the Bear funds and Deutsche Bank was said
to be shopping $600 million in assets. In the last week, escalating
problems at the Bear Stearns High Grade Structured Credit Strategies
Enhanced Leveraged Fund and a related fund have jarred investors into
confronting systemic risks in the once booming market for bonds that are
backed by subprime mortgages. Last year, more than $483 billion of such
bonds were issued, up 5 percent from 2005.
href='http://www.nytimes.com/2007/06/21/business/21bonds.html?ref=business&pagewanted=print'>Read
more.
name='14'>Congress Weighs End to Hedge Fund Tax Break
/>
Leaders of the tax-writing committees in Congress are considering a new
proposal to end a little-known tax break that has allowed wealthy
financiers who run private equity firms and hedge funds to cut their
total income tax bills by billions of dollars, the New York
Times reported today. The new proposal would affect many more firms
and could raise $4 billion to $6 billion annually. It may be attached to
a tax bill expected as early as July as a way of helping offset the cost
to the Treasury of relieving the growing burden of the alternative
minimum tax on large numbers of taxpayers. At the heart of the newest
proposal is an attempt to bar private equity and hedge fund operators
from a longstanding, but little understood, practice that has allowed
them to pay a lower capital gains rate of 15 percent instead of the
ordinary top income tax rate of 35 percent on their performance fees,
which typically represent most of their annual income. The industry
argues that the portion of profits they receive from investments should
receive preferential treatment because of the risk involved. However,
critics contend that the fees are effectively bonuses because private
equity firms have little, if any, of their own money at stake.
href='http://www.nytimes.com/2007/06/21/business/21tax.html?_r=1&oref=slogin'>Read
more.