July 12, 2004

MCI Files Suit Against Ex-CEO
Ebbers

MCI Inc. on Friday filed a
lawsuit against Bernard Ebbers seeking to recover money from the ousted
former CEO, according to court documents, Reuters reported. The lawsuit
was filed in the U.S. Bankruptcy Court for the Southern District of New
York.

Jury Fails to Decide on
Michael Rigas Fraud

A federal jury that convicted
Adelphia founder John Rigas of fraud and conspiracy failed on Friday to
reach a verdict on 17 criminal counts against his son, Michael Rigas,
another former executive of the bankrupt cable company, Reuters
reported. After an 18-week trial and nine days of deliberations, U.S.
District Judge Leonard Sand declared a hung jury and dismissed the
jurors after they told the court 'they tried to no avail' to reach a
unanimous decision on the remaining securities and bank fraud charges
against Michael Rigas, the newswire reported.

US Airways CEO Says Cost Cuts Are Needed to Avoid Big
Losses

Without speedy and deep cost reductions,
US Airways Group could post big
losses in the second half, fall afoul of the terms of a federally backed
loan 'and just run out of steam sometime next year,' the carrier's CEO
warned employees in a phone message last week, the Wall
Street Journal reported. Bruce Lakefield has targeted $1.5 billion
in annual cost savings, including $800 million from labor concessions
and enhanced worker productivity. So far, only the pilots union has
engaged in negotiations. 'I can't emphasize strongly enough how
important it is for us to get our costs in line -- quickly,' the retired
investment banker told the airline workers in a weekly update. 'We have
much work to do with all of our labor groups,' the online newspaper
reported.

Loral Shareholders Press Court
to Help With Claims

A shareholders group in
bankrupt Loral Space & Communications charged in court filings this
week that the satellite company improperly undervalued itself in chapter
11 to leave them with nothing for their holdings, Reuters reported. The
group, led by shareholders claiming to hold about 3.5 percent of Loral's
stock, plans to argue in U.S. Bankruptcy Court on July 27 that it should
be accorded 'official' status, meaning it can hire legal and financial
advisors at company expense to press their claims. Loral, which filed
for bankruptcy in July 2003, has stated in regulatory filings that its
equity will likely have no value after its reorganization is submitted
to the court in coming months.

Footstar to Outsource
Warehouse, Distribution Opportunities

Bankrupt shoe retailer Footstar
Inc. on Friday said it agreed to sell a distribution center and to
outsource some warehousing and distribution operations in a bid to focus
on its Meldisco retail business, Reuters reported. Footstar, which filed
for chapter 11 bankruptcy protection in March, said it plans to sell its
distribution center in Mira Loma, Calif. to Alere Property Group for
about $20 million. The West Nyack, N.Y.-based company had also sold all
of its Footaction and Just For Feet retail stores earlier this year.
Footstar distributes its Thom McAn brand through 2,441 licensed footwear
departments at Wal-Mart Stores Inc. and Kmart Holdings Corp., which
emerged from its own bout with bankruptcy court.

Laidlaw Posts Profit, Seeks
Toronto Delisting

Laidlaw International Inc., a
bus operator that emerged from bankruptcy in June 2003, reported a
quarterly profit and a 3 percent rise in revenue, Reuters reported.
Laidlaw, which is seeking the delisting of its stock from the Toronto
Stock Exchange due to a lack of trading activity, reported revenue of
$1.24 billion for the fiscal third quarter ended May 31 and net income
of $34.6 million. Last
year's net income of $62.2 million was not comparable because the
company's interest expense was not figured during the company's
bankruptcy proceedings. Laidlaw's third-quarter earnings before
interest, taxes, depreciation and amortization increased to $164.2
million from $150.9 million, the newswire reported.

Air Canada Unit Attendants
Extend Labor Vote Period

Flight attendants at Jazz, Air
Canada's regional airline, on Friday agreed to extend the period to vote
on a cost-cutting pact that is part of the carrier's effort to
restructure under bankruptcy protection, Reuters reported. The 1,100
flight attendants are the last of nine bargaining groups across the
seven unions representing the bulk of Air Canada's 33,000 employees that
has yet to ratify an agreement on wage and job concessions aimed at
trimming costs by C$200 million ($151.5 million). Denis Ellickson, a
lawyer for the Teamsters union representing the Jazz flight attendants,
said only about 35 percent had voted on the pact by Friday's original
deadline. Voting will continue by telephone early next week.

U.S. States to Fight
Judge's Ruling in KPMG Battle

Fourteen U.S. states will
appeal a federal bankruptcy court judge's decision that allowed
accounting firm KPMG to collect $150 million in fees from MCI Inc. and
keep auditing the telecommunication company's books, a state official
said on Friday, Reuters reported. The states say MCI, called WorldCom
before it set the record for U.S. bankruptcies, owes them more than $2
billion in back taxes. They also argued that KPMG should be fired as
MCI's auditor because it had a conflict of interest. U.S. Bankruptcy
Court Judge Arthur Gonzalez late last month ruled that the states had
waited too long to file their claim against KPMG. On Friday, the judge
approved the states' request for more time to file an appeal, giving
them until July 30, the newswire reported.

Enron Prosecutors to Keep
Pressure on Lay

The Enron Task Force's move to
keep alive its investigation shows that the government intends to press
on for any overlooked documents or witnesses to strengthen its case
against former Enron Chairman Ken Lay, legal experts said on Friday,
Reuters reported. The Task Force, formed just weeks after Enron Corp.'s
bankruptcy filing in December 2001, has indicted 31 former Enron
employees and others linked to the company's downfall, and reached
Enron's highest echelon on Thursday with the 11 criminal counts lodged
against Lay, the newswire reported.

Alaska Air to Take Charge
for Jet Retirements

Alaska Airlines on Friday said
it expects to record an unspecified charge against second-quarter
earnings to reflect the planned retirement of its fleet of Boeing Co.
737-200 jetliners by the end of 2007, Reuters reported. SeaTac,
Wash.-based Alaska, a unit of Alaska Air Group Inc., operated nine of
the narrow-body 737-200s in its fleet of 109 aircraft at the end of
2003. The aircraft, on average 23 years old, can be configured to carry
111 passengers or cargo and serve various Alaskan
communities.

Lessons of Success -- and
Failure

For entrepreneurs, there's
something to be learned from every company that made it big -- as well
as from every company that crashed and burned, according to a Wall
Street Journal article. Read the full article at
href='http://www.wsj.com/'>www.wsj.com (subscription
required).