January 11, 2006
Northwest Gets Six More Months for Plan
A federal bankruptcy judge on Tuesday granted Northwest Airlines Corp. six more months to file a reorganization plan without interference from creditors, Reuters reported yesterday. Judge Allan Gropper of the U.S. Bankruptcy Court in Manhattan awarded the extension through July 13 of Northwest's "exclusivity" period in a three-page order. Eagan, Minn.-based Northwest had argued in a court filing that its bankruptcy is "among the largest and most complex" ever filed. It said it was "hopeful" it could file a reorganization plan this year. Northwest is trying to cut $2.5 billion of costs, including $1.4 billion from labor, and is seeking court permission to scrap costly contracts with various unions. Like other major U.S. carriers, it has suffered from high fuel costs and intense competition from low-fare rivals.
Asbestos Clients Sue Florida Bar for Millions
More than 4,000 people ailing from asbestos exposure sued the Florida Bar yesterday to recover $13.5 million in damage settlements allegedly pilfered by a disbarred Miami lawyer, the Miami Herald reported today. The proposed class action by the asbestos victims once represented by former attorney Louis Robles sought civil relief in Miami federal court after the Bar refused to pay any of the misappropriated settlements from a special fund. “This lawyer stole $13.5 million from ill and elderly victims, and no one gives a damn,'' said lawyer Thomas Tew, whose firm, Tew Cardenas, is representing the nationwide group of Robles' former asbestos clients. In early 2003, Tew was assigned by the Miami-Dade Circuit Court to sort out thousands of asbestos claims left in limbo after Robles shut down his firm, dumping client files, including X-rays, on the floor of a West Miami-Dade warehouse. Read more.
Atkins Nutritionals has emerged from bankruptcy with a revised business model that hinges less on the popularity of the low-carb diet espoused by its founder, the Lakeland Legend reported today. The company said that it isn't abandoning the legacy of the late diet guru Dr. Robert C. Atkins, but that it is no longer publishing books about the Atkins diet and has jettisoned almost all of a once-broad product line that included low-carb bread, bagels, pasta, cookies and cheesecake. Its new focus is selling Atkins Advantage protein bars and shakes, which have been around since 1997, but have been recently reformulated to taste better, company officials said.
No Jury Trial for Weil Firm in Texas Malpractice Suit
A Texas bankruptcy judge has stricken a church group's jury trial demand in a legal malpractice suit against New York's Weil, Gotshal & Manges, the New York Law Journal reported on Friday. The National Benevolent Association, the social services arm of the Christian Church (Disciples of Christ), filed suit against Weil Gotshal Sept. 14 in U.S. Bankruptcy Court for the Western District of Texas in San Antonio, charging that the firm produced "disastrous results" by advising the St. Louis-based charity to file for chapter 11 protection last year instead of seeking a negotiated deal with creditors. The group claims Weil Gotshal urged a bankruptcy filing to generate legal fees, but the restructuring resulted in its loss of most of its facilities and employees, destroying its ability to carry out its mission of providing shelter to at-risk children and the elderly. Read more. (Subscription required).
Personal Bankruptcy Cases Hit Record
A rush of people seeking bankruptcy protection before the new law took effect pushed personal filings for 2005 to their highest level on record — more than 2 million, according to new data, the Associated Press reported today. Significant increases in consumer bankruptcy filings occurred in every region, according to the data being released today by Lundquist Consulting Inc. The firm tallied 2.04 million filings last year, up 32 percent from 1.55 million in 2004 — meaning that one in every 53 households filed bankruptcy petitions, the firm said.
Adelphia Communications filed with a U.S. bankruptcy court a supplement to its fourth amended reorganization plan, BankruptcyData.com reported today. According to the company, this filing is called for in §15.07 and contains forms of various plan documents related to the plan.
Morgan Stanley Buys Bankrupt Trump Casino Stock
After helping to bail Trump Entertainment Resorts Inc. out of bankruptcy
proceedings with a $500 million credit facility, Morgan Stanley is now
gobbling up the casino company's stock, Dow Jones Newswires reported today.
Since Trump Entertainment emerged from bankruptcy in May, Morgan Stanley has
bought 349,519 common shares of the Atlantic City, N.J., casino operator,
with purchases accelerating in the past month. While the bankruptcy
proceedings allowed the former Trump Hotels & Casino Resorts Inc. to shed
more than $500 million in debt, it also led to real-estate mogul Donald J.
Trump being stripped of his CEO title and a big chunk of
his stake in the company. Mr. Trump remained chairman and the company's
largest shareholder, however, and he also gained a $500,000 pay raise in the
process. Read more.
Refco Judge Rejects Request for Trustee
A federal bankruptcy judge denied a request by the Justice Department to
appoint a trustee to take over Refco's bankruptcy case, provided the
company's current directors resign this week, Bloomberg News reported today. "The appointment of a trustee is an extraordinary remedy," said Judge Robert
D. Drain of U.S. Bankruptcy Court in New York in his ruling. "In my
mind, it all hangs on the board. Provided the board members resign by next
Friday, I will deny the motion." The original request to appoint a trustee
was aimed at protecting the interest of creditors, who are owed $16 billion.
Refco, a broker based in New York, supported the appointment of a trustee.
Its unsecured creditors' committee opposed the move, arguing it should be
entrusted to pursue claims against company officials on behalf of creditors
for the remainder of the bankruptcy case.
Two Musicians in a Legal Dispute Will Keep Their Instruments
An anonymous donor has stepped forward with $200,000 to help members of the
Audubon String Quartet avoid the loss of their instruments in a legal
dispute with a member they had dismissed, people involved in the case said
yesterday, the New York Times reported today. Clyde Shaw, cellist, and Doris
Lederer, violist, of the Audubon String Quartet will avoid having their
instruments confiscated for liquidation. The fired member, David Ehrlich,
who won a lawsuit and a $611,000 judgment against the other three quartet
members, said in an interview that he had agreed to accept the payment so
that a bankruptcy trustee would not liquidate the instruments. The agreement
was the first stage in a broad settlement that lawyers for each side are
trying to work out. Read more.
PG&E Claim Issue Sent to Calif. Court
A U.S. federal court on Tuesday said a claim for restitution in lawsuits
that accused Pacific Gas & Electric Co. of wrongly transferring billions of
dollars to its parent PG&E Corp. during the California energy crisis can be
heard by a state court, according to a Reuters report yesterday. The 2-1
decision by a three-judge panel of the U.S. Ninth Circuit Court of Appeals
reversed a ruling by a U.S. District Court judge. California Attorney
General Bill Lockyer and San Francisco City Attorney Dennis Herrera filed
suits early in 2002, alleging that PG&E had engaged in "unlawful, unfair and
fraudulent business acts" and illegally transferred between $4 billion and
$5 billion from utility customer revenues to itself. District Court Judge
John Walker later ruled that parts of the suits could proceed in state
court, but not the restitution claim because PG&E at the time was in the
middle of its chapter 11 bankruptcy case. The Ninth Circuit ruling, however,
said the California and San Francisco suits "constitute police or regulatory
power actions" that cannot be stayed by bankruptcy proceedings. Read more.