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February 25, 2005
Senate to Focus on Bankruptcy Bill Before Easter Recess
The Senate will reconvene on Monday and will start debate on
bankruptcy legislation, CongressDaily reported. Although
Republicans are confident they have enough votes to pass the bill this
time, its complexity and controversial nature likely will limit the
Senate’s ability to consider other important legislation before
the beginning of the spring recess in three weeks, the newswire
reported. Senate Judiciary Chairman Arlen Specter (R–Pa.) told
reporters he does not plan to miss next week’s Senate action on
the bill. “We’ll start that debate Monday…and
I’ll be on the floor to move the bill ahead,” Specter said.
He said he has not decided whether to support an abortion-related
amendment House GOP leaders strongly oppose.
Specter Unsure of Votes for Next Week’s Asbestos Markup
Senate Judiciary Chairman Arlen Specter (R–Pa.) said yesterday
his committee might mark up his asbestos legislation next Thursday, but
he noted he was not sure he had the votes to report the bill out of
committee in its current form, CongressDaily reported.
Specter is working to balance concerns about the long-stalled asbestos
bill from the left and right as he struggles to line up Republican
votes. Specter said he plans to meet Tuesday with Majority Leader Bill
Frist (R–Tenn.) and committee Republicans about GOP members’
problems with the proposed bill, the newswire reported.
Economic Growth Estimated at 3.8 Percent
The economy grew at a solid 3.8 percent annual rate in the final
quarter of 2004—stronger than previously estimated—and an
encouraging sign of strong business expansion, the Associated Press
reported. The new reading on gross domestic product, released by the
Commerce Department today, was better than the government’s
initial calculation made a month ago. That estimate showed the economy
growing at a 3.1 percent pace.
MCI
MCI–Verizon Plans to Slash Legal Team
Verizon Communications Inc.’s $6.7 billion proposed acquisition
of MCI Inc. would result in job losses in the corporate legal
department—in all, 357 attorneys work for the two telecom
giants—and it will almost certainly mean some outside law firms
are going to lose a big client. Read the article at
href='http://www.law.com/jsp/article.jsp?id=1109128216854'>www.law.com/jsp/article.jsp?id=1109128216854.
Qwest Revises and Sweetens Its MCI Offer
The latest offer from Qwest came a week after the board of MCI voted
to accept a $6.75 billion takeover proposal from Verizon, despite
receiving a higher offer from Qwest that was worth about $8 billion in
cash and stock, the New York Times reported.
The board of MCI chose Verizon’s bid over Qwest’s because
it said that it was not comfortable with the financial stability of
Qwest and the long-term value of its stock, according to people involved
in the discussions. Qwest’s modified bid, released in a public
filing on Thursday, was aimed at winning over MCI shareholders, who have
been concerned that Qwest’s enormous debt and relative financial
weakness would present a risk.
Witness Says Ebbers Was Unaware of Accounting Fraud
Defense lawyers for Bernard J. Ebbers, the former chief executive of
WorldCom, called a former WorldCom board member yesterday to try to
refute testimony by the prosecution’s star witness, Scott D.
Sullivan, that Ebbers knew about the fraudulent accounting practices
that brought down the company, the New York Times reported.
Bert C. Roberts Jr., an outside board member at WorldCom until 2002,
testified yesterday that Sullivan, WorldCom’s former chief
financial officer, told him that Ebbers knew nothing about journal
entries that turned out to be fraudulent.
Armstrong World Sees Big Delay in Bankruptcy Exit
Armstrong World Industries Inc., a flooring, ceiling and cabinet
maker operating under bankruptcy protection, on Thursday said it expects
to be “substantially delayed” in emerging from chapter 11
because a federal judge found its reorganization plan unfair to some
creditors, Reuters reported. U.S. District Judge Eduardo Robreno ruled
on Wednesday that the distribution of new warrants to former
shareholders, over the objection of unsecured creditors, was not
“fair and equitable” under U.S. bankruptcy laws because it
failed to properly prioritize creditors’ claims. “Bluntly
put, no amount of legal creativity or counsel’s incantation to
general notions of equity or to any supposed policy favoring
reorganizations over liquidation supports judicial rewriting of the
Bankruptcy Code,” Robreno wrote in a 40-page opinion. The company
said it is studying Robreno’s opinion, and has discussed its
options with its advisers and others involved in the case. It did not
immediately return a call seeking further comment. Armstrong World, a
unit of Lancaster, Pa.–based Armstrong Holdings Inc., filed for
chapter 11 protection from creditors in December 2000 after being
crushed by claims related to floor tiles containing asbestos. It
originally listed assets of $4 billion and debts of $3.3 billion.
Feds to Question Krispy Kreme Executives
Krispy Kreme, whose accounting methods are under scrutiny by the
Securities and Exchange Commission, said federal prosecutors in New York
will interview current and former officers and employees, Reuters
reported. Krispy Kreme said the questions relate to the matters
currently under formal investigation by the Securities and Exchange
Commission. The SEC has been looking accounting problems at the company
famous for its doughnuts. The company issued a restatement of its 2004
results showing it had understated expenses related to these
transactions, earlier this year.
Adelphia Creditors Would Take Offer if It Is All Cash
Adelphia Communications Corp. creditors have told Time Warner Inc.
and Comcast Corp. that they would accept an all-cash $17.6 billion offer
for the company, instead of the current $17.6 billion stock-and-cash
offer made by the two companies, the Wall Street Journal
reported. The current Time Warner and Comcast bid consists of $12
billion in cash and roughly $5.6 billion in stock in a new company that
would be formed from Adelphia and Time Warner’s cable units, the
newspaper reported.
Start of Enron Trial Is Set for January ’06
The fraud and conspiracy trial of Enron Corp. founder Kenneth Lay and
former CEO Jeffrey Skilling has been set for Jan. 17, 2006, said U.S.
District Judge Sim Lake, who yielded to defense requests for more time
to prepare and sought to avoid holiday conflicts, the Wall Street
Journal reported. Enron’s former top two executives and
their co-defendant, former top accountant Richard Causey, wanted a Dec.
1 trial, while prosecutors wanted to begin in September, the newspaper
reported.
Judge Dismisses Yukos Bid for Bankruptcy
A federal judge here dismissed on Thursday night an effort by the
Russian oil company Yukos to seek bankruptcy protection in the United
States, thwarting its hope of putting some American legal hurdles in
front of the international banks involved in the Russian
government’s breakup of the company, the New York
Times reported.
The ruling may set an important precedent for financially troubled
foreign companies seeking haven in bankruptcy courts in the United
States, one of the few nations where executives of debtor companies are
normally allowed to retain control after filing for bankruptcy
protection, the newspaper reported.