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October
10, 2007
name='1'>Supreme Court Justices Appear Skeptical of Plaintiffs'
Arguments in Corporate Fraud Case
A claim by class-action
lawyers to hold third parties liable for stock fraud looked unfavorable
after Supreme Court arguments yesterday, the
size='3'>Wall Street Journal reported today.
Only two justices, David Souter and Ruth Bader Ginsburg, showed much
sympathy for the theory that private investors should be able to seek
compensation from suppliers or others for helping a public company
mislead the market. The case before the court,
face='Times New Roman' size='3'>Stoneridge Investment Partners LLC v.
Scientific-Atlanta Inc., involves a scheme to
pump up the stock price of Charter Communications Inc., a
size='3'>St. Louis cable
provider. Stanley Grossman, representing investors, told the court that
the suppliers, Scientific-Atlanta, now a unit of Cisco Systems Inc., and
Motorola Inc., were 'not passive bystanders,' but rather 'integral to
the scheme.' The distinction, he argued, was that the suppliers had
facilitated the fraud through deception, unlike the 1994 case in which
the defendant, a bank, hadn't been proven to commit a deceptive act. The
argument did not seem to resonate with the Justices, however. 'I see
absolutely no difference between your test and the elements of aiding
and abetting,' said Justice Samuel Alito. 'There are any number of
kickbacks and mismanagements and petty frauds that go on in the
business, and business people know that any publicly held company's
shares are going to be affected by its profits,' said Justice Anthony
Kennedy, 'so I see no limitation to your proposal for
liability.'
href='http://online.wsj.com/article/SB119193888104453378.html?mod=us_business_whats_news'>Read
more. (Registration required.)
name='2'>Werner Creditors and PBGC Reach Agreement on
Pensions
Werner Holding Co.'s
unsecured creditors struck an agreement with the Pension Benefit
Guaranty Corp. (PBGC) over the millions it wanted for the ladder maker's
employees' pensions, with the committee acceding to the claims, but
reducing them to nonpriority status,
size='3'>Bankruptcy Law360 reported yesterday.
The PBGC had asserted three claims against Werner's estates, the first
and largest of which was one for $27 million for unfunded benefit
liabilities of the company's employee retirement plan. The committee
said that the claim was filed contingent on termination of the pension
plan, which was terminated on Oct. 3. The
committee had never formally objected to the PBGC's claims in the
bankruptcy, the creditors said Friday, but it and Werner had objected
previously to a handful of other claims that had been put forth by other
parties as priority. The committee explained that it hoped to avoid
litigation of its dispute with the PBGC with its joint proposal of a
stipulation and settlement.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=37062'>Read
more. (Registration required.)
w:st='on'>
name='3'>Utah
size='3'> Bankruptcies Climb 23 Percent
w:st='on'>
size='3'>Utah
bankruptcies for the first nine months of the year increased 23 percent
over last year, the Salt
Lake Tribune reported yesterday. Although the
23 percent gain is significant - especially during a time when
size='3'>Utah
is said to be booming - it is far from a nine-month record, which was
set 10 years ago when 30 percent more Utahns than in the previous year
sought relief from their creditors. Chapter 13 filings saw the largest
increase; 42 percent of the 4,633 petitions filed through Sept. 30
sought chapter 13 relief compared to 38 percent a year ago.
href='http://www.sltrib.com/ci_7123091'>Read more.
Autos
name='4'>Auto Parts Maker Remy Files Chapter 11 Petition,
Plan
Auto parts maker Remy
International Inc. filed a joint chapter 11 reorganization plan with the
bankruptcy court Tuesday, seeking approval of a prepackaged plan that
has already received support from the company’s noteholders,
Bankruptcy Law360 reported yesterday. Remy and several of its
U.S. affiliates filed voluntary petitions for bankruptcy
protection in the U.S. Bankruptcy Court for the District
of Delaware on Monday, promising that the proposed reorganization plan
will reduce the company’s debt by $360 million and repay secured
creditors in full. The company filed a number of first-day motions,
along with its reorganization plan yesterday. Barclays Capital will
provide Remy debtor-in-possession financing of up to $225 million along
with up to $330 million of exit financing, according to the
company.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=37024'>Read
more. (Registration required.)
name='5'>Chrysler Seen as Able to Absorb the Effects of a Short
Strike
If workers at Chrysler
factories across the country walk off the job this morning, Chrysler
will be able to weather the short-term effects of the strike as it has
at least three months’ worth of most vehicles in stock and has
shut half of its U.S. assembly plants this week to let those inventories
thin out, the New York
Times reported today. Its most important new
vehicles, a pair of minivans and the Jeep Wrangler, would keep rolling
off assembly lines, because the Wrangler factory in
w:st='on'>Ohio
has a separate labor contract and one of the two minivan
factories is in
w:st='on'>
size='3'>Canada
Today’s strike deadline, at 11 a.m. ET, comes on the same day that
voting on the union’s tentative agreement with General Motors is
scheduled to finish. As of yesterday, most GM union locals had approved
the deal, reached Sept. 26 after a two-day strike.
href='http://www.nytimes.com/2007/10/10/business/10auto.html?ref=business&pagewanted=print'>Read
more.
name='6'>Adelphia Looks to Appeal Ruling on Lucent
Claim
Dissatisfied with a
bankruptcy court decision that denied a motion to dismiss claims filed
by Lucent Technologies, Adelphia Communications Corp. (ACC) has moved
for leave to appeal the ruling,
size='3'>Bankruptcy Law360 reported yesterday.
Lucent had filed a $44.7 million claim for “telecommunications
products,” seeking to hold Adelphia liable for the debts of Devon
Mobile Communications LP, a limited liability partnership created by
Adelphia and Devon GP Inc. Adelphia, however, objected to the claim on
the grounds that under Delaware's Revised Uniform Limited Partnership
Act, “a
limited partner is not liable for the obligations of a limited
partnership unless he or she is also a general partner or, in addition
to the exercise of the rights and powers of a limited partner, he or she
participates in the control of the business.”
face='Times New Roman' size='3'>Lucent refuted the argument, claiming
that “due to the manner in which ACC caused the Devon partnership
to be created and operated, ACC should be deemed to have acted in the
capacity of a general partner of Devon, and should therefore be liable
for Devon's debts to Lucent.”
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=36967'>Read
more. (Registration required.)
name='7'>American Home Mortgages Moves to Squash Document
Request
Bankrupt mortgage lender
American Home Mortgage Investment Corp. has asked a judge to reject a
major investor's request for documents, saying that it would divert
resources from more important things like the sale of its loan servicing
business, Bankruptcy
Law360 reported yesterday. In court documents
filed Friday with the U.S. Bankruptcy Court for the District of
Delaware, American Home noted that it had already received 80 objections
to its sale motion and that it was facing a trio of adversary suits that
had been “multi-tracked” for trial. As a result, American
Home said it did not have time to compile the vast amount of information
requested by Vantage Pointe Capital LLC, which is hoping to shed light
on how the company managed to lose so much capital so fast in the days
leading up to its bankruptcy filing. It added that numerous documents
demonstrating the company's decline in equity value were already
publicly available and that the magnitude of the document request was
unduly burdensome.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=37060'>Read
more. (Registration required.)
name='8'>Commentary: Banks Looking to Unload LBO
Loans
Banks could be stuck
holding hundreds of billions of dollars of LBO loans for months to come
unless the pace of sales quickens, the
size='3'>Wall Street Journal reported today.
Though banks pulled off a surprising feat recently in selling $30
billion of loans for leveraged buyouts many analysts and investors are
wondering what they are going to do about the other 90 percent of the
LBO loans currently in the pipeline. The deal-making machine of
private-equity firms, which was in high gear when credit markets seized
up over the summer, was one of the first casualties of the credit market
problems. Gone was the buyout shops' access to cheap loans and investor
demand for the loans -- and the price for them fell in step. That left
Wall Street banks such as Citigroup Inc., Credit Suisse Group and J.P.
Morgan Chase & Co. holding some $400 billion in debt they had
promised as financing for purchases private-equity firms had in the
works globally. Unless the pace of sales quickens in the coming weeks,
banks could be stuck holding these hundreds of billions of dollars of
loans for months to come -- a big risk if the economy slows and
corporate profits weaken.
href='http://online.wsj.com/article/SB119197749870054211.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
SEC
Finds Fault on Pay Disclosures
Corporations are falling
short in explaining to investors how executives are compensated and for
what, Securities and Exchange Commission officials said Tuesday in their
first review of corporate filings since new pay disclosure rules were
put in place, the New
York Times reported today. The SEC called on
corporations to give investors more insight into how they made
compensation decisions and to ensure that proxies were “clear,
concise and understandable.” Corporate boards, regulators said,
could also do a better job in discussing how they chose performance
targets, severance packages and the peer companies they used as
comparisons for their pay practices. Federal regulators spent this
summer reviewing compensation reports, sending inquiries to companies
and chief executives they believed had failed to provide enough
information.
href='http://www.nytimes.com/2007/10/10/business/10pay.html?ref=business&pagewanted=print'>Read
more.
name='10'>Roadhouse Grill Files for Bankruptcy
Roadhouse Grill, which
had sales of $116 million last year, filed for chapter 11 yesterday in
the U.S. Bankruptcy Court in
w:st='on'>West Palm
Beach
w:st='on'>
size='3'>Fla.
Associated Press reported yesterday. Willie's Roadhouse Grill LLC, an
investment vehicle controlled by restaurateur John Metz, bought an 85.5
percent stake in the company from Duffy's Holdings Inc. on Monday,
according to court papers. Willie's Roadhouse has agreed to provide $2
million to fund Roadhouse Grill's reorganization under chapter
11.
size='3'>Metz
w:st='on'>
Palm Beach businessman who
owns a number of Bennigan's and Denny's franchises, intends to continue
operating 38 of the Roadhouse locations. Roadhouse Grill, founded in
1992, had more than 80 locations in eight states at its peak, but the
chain has been losing money for years with more than $51 million in net
losses since 2002. In 2006 it lost $10.7 million on revenue of $116
million.
href='http://www.chron.com/disp/story.mpl/ap/fn/5200548.html'>Read
more.
href='http://www.chron.com/disp/story.mpl/ap/fn/5200548.html'>