December 302004

December 30, 2004

Corporate Bankruptcy Filings Hit 10-year Low

2004 marks the lowest number of bankruptcy filings by U.S. public
companies in 10 years, as low interest rates and better access to
financing helped troubled businesses amass cash and pay debts, according
to a research report, Bloomberg News sources said. This year, 80 public
companies filed for bankruptcy, including Trump Hotels & Casino
Resorts Inc. and US Airways Group Inc. The total is less than a third of
the record 257 publicly traded U.S. corporations that sought chapter 11
protection in 2001, according to a Dec. 27 report by New Generation
Research. Low financing costs helped U.S. companies pay down debt and
amass a record $1.3 trillion cash stockpile at the end of the third
quarter, according to Federal Reserve data.

Los Angeles’ Wave Community Newspapers Files for Bankruptcy
Protection

Wave Community Newspapers Inc., which publishes seven weekly
newspapers serving black and Hispanic readers in Southern California,
has filed for bankruptcy protection, according to the Associated Press.
The group, which has 40 employees and a combined circulation of 150,000,
filed its court papers seeking protection under chapter 11 of federal
bankruptcy laws last week. According to court documents, Wave owes as
much as $10 million to more than 17 creditors. Pluria Marshall Jr.,
Wave’s publisher and chief executive, said the decision to file
for bankruptcy protection stemmed from a dispute with its primary
creditor, the Los Angeles Community Development Bank, which began
liquidating its assets this year after many of its loans were not
repaid. Wave owes the bank about $4 million. The company spent a year
trying to work out a deal with the bank before the bank went into
receivership, Marshall said.

Judge Denies Premium to Law Firm in MCI Case

A federal judge has denied a request by the law firm that represented
unsecured creditors in the MCI Inc. bankruptcy case to receive a $3
million premium for helping rehabilitate the company, Bloomberg News
reported. Washington-based Akin Gump Strauss Hauer & Feld, which
represented MCI’s unsecured creditors’ committee, asked for
the premium in addition to $16 million in fees and expenses already
awarded by the U.S. Bankruptcy Court in New York. “There is no
reason to believe that the rates charged by Akin Gump throughout this
case do not reflect the market value of their expertise,” U.S.
Bankruptcy Judge and ABI member Arthur Gonzalez said Wednesday.
“Akin Gump’s request for a fee enhancement is denied.”
Professionals who worked on the MCI bankruptcy case are seeking to be
paid $657 million, the second-highest request ever in a bankruptcy case.
MCI filed the largest bankruptcy in U.S. history in July 2002 when it
was still called WorldCom Inc. “We strongly believe that if there
ever were a case in which counsel for a committee was entitled to a
premium, this was it,” Daniel Golden, a partner with the firm and
one of the lead lawyers on the case, said. “We are disappointed in
Judge Gonzalez’s ruling but understand how difficult it is to get
a premium under existing case law.” More than 130 Akin Gump
lawyers and clerks worked on the MCI case. Golden billed the most,
almost $1.2 million, for his work on the case, court papers show.

ATA Pilots Consider Cutting Pay by $6 Million

ATA Airlines pilots will vote this week on whether to take a $6
million pay cut over the next four months, the pilots union said
Wednesday, reported the Associated Press. The vote may begin Thursday
and end Jan. 9, the union said. ATA, which filed for bankruptcy
protection in October, negotiated the cutbacks with the master executive
council of the Air Line Pilots Association, which announced the
tentative concessions Wednesday. It would be the second set of
concessions for the Indianapolis-based airline’s 1,100 pilots. The
latest package would cut pay, change some work rules and reduce ATA
pension contributions by half. ATA flight attendants also accepted a 10%
pay cut this year. A federal judge last week approved Southwest
Airlines’ $117 million deal with ATA Airlines, a package that
gives ATA a cash infusion it needs to keep flying as it emerges from
bankruptcy protection. Under the deal, Dallas-based Southwest will add
six of ATA’s 14 Midway gates to its current 19, increasing its
Midway capacity by nearly a third.

United Parent Seeks OK for Cutting O’Hare Debt

United Airlines parent UAL Corp. discussed in bankruptcy court
Wednesday an agreement it has reached to eliminate $450 million of its
$600 million debt to Chicago O’Hare International Airport,
according to the Denver Post. United called it “a significant step
forward” as it attempts to exit bankruptcy protection. Plans are
to send the agreement to bondholders for their review and, if there are
no objections, to present the agreement to a bankruptcy judge in
February. “We’re pleased that we’ve reached an
agreement that we feel is a fair settlement,” said United
spokesman Jeff Green.
href='http://www.denverpost.com/Stories/0,1413,36~33~2625531,00.html'>Read
the full article.

Workers Respond, Help Out US Airways

US Airways said yesterday that several hundred employees responded to
its call to volunteer at its troubled Philadelphia operations this
holiday weekend as the airline braces for another heavy travel period,
according to the Washington Post. Starting today, a
combination of union and nonunion workers—executives, clerical
workers, pilots and flight attendants—will be on hand to meet and
greet customers. The response from employees came swiftly after the
airline issued a memo Tuesday seeking volunteers. The employees will not
be paid if they are working on their day off.
href='http://www.washingtonpost.com/wp-dyn/articles/A35267-2004Dec29.html'>Read
the full article.