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October 4, 2006
Supreme Court
id='1'>Supreme Court Refuses PG&E Case
The U.S. Supreme Court
has declined to hear a case filed by the city of
w:st='on'>
Francisco
Gas and Electric Co., paving the way for the city to sue the energy
company for billions of dollars in customer refunds,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday.
size='3'>PG&E had appealed a federal appeals court ruling that
revived two lawsuits against the company, which alleged that PG&E
had transferred funds to its parent company before filing for chapter 11
protection in 2001. A lower court had tossed the suits in 2003,
prompting the city to appeal the decision. The suits claim that just
before its bankruptcy filing, PG&E transferred almost $5 billion to
its parent company, PG&E Corp., in the form of dividends and stock
payments. Customers became even more irate when the company exited
bankruptcy in 2004 as PG&E’s reorganization plan did not
include any mention of reimbursement by the parent company.
id='2'>High Court Passes on American HomePatient
Case
The U.S. Supreme Court has
refused to take up the appeal of American
size='3'>HomePatient Inc.’s debt-holders, letting the health care
company’s confirmed reorganization plan stand,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. On Tuesday, American HomePatient revealed
that the Supreme Court had denied the petition for writ of
certiorari sought by the holders of the company’s senior
debt. The refusal allows the decision handed down last year by the Sixth
Circuit Court of Appeals to remain in effect and marks the end of a
three-year battle to overturn the confirmation orders. In trying to
emerge from chapter 11, the company proposed a reorganization plan that
split the secured and unsecured debt, with the secured debt earning
interest at a rate consistent with the pre-bankruptcy rate of return.
The lenders objected to the move, arguing that the interest rate should
be set at the market price for such a loan, with the combined rate based
on three additional components—senior secured, mezzanine and
equity.
Two
Senators Want Pension Agency to Get a Checkup
Sens. Charles E. Grassley
(R-Iowa) and Max Baucus (D-Mont.) said Tuesday that they wanted the
Government Accountability Office to report back by early next year with
preliminary information on the Pension Benefit Guaranty Corp.’s
(PBGC) finances and operations, the Associated Press reported
yesterday. In their letter to the Government
Accountability Office, the senators said that 80 percent of all claims
against the agency had come since 2000. In 2000, the agency paid
benefits of $900 million to 243,000 people. Five years later, it was
paying $3.7 billion in benefits to 698,000 people, the senators wrote.
“This rapid increase in participants, benefit payments and
investments would be a challenge to any organization,” the
senators wrote. “We are particularly concerned in how PBGC is
handling this challenge and whether legislative changes are needed in
PBGC’s structure, appropriations or law.”
href='http://www.nytimes.com/2006/10/04/washington/04pension.html?_r=1&oref=s…'>Read
more .
Airlines
id='4'>Delta Faces
w:st='on'>
size='3'>Battle
Claims
Delta Air Lines Inc.
faces a battle over at least $380 million in tax and other benefits
claimed by companies that financed its acquisition of more than 50
aircraft, Dow Jones Newswires reported yesterday. In papers filed with
the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
has said it's eager to avoid the quarrels that have surfaced in other
big airline bankruptcies over tax benefits owed to aircraft financiers,
so the carrier asked a judge to set procedures that would permit 'a
coordinated and efficient litigation of these complicated issues.'
However, a large group of financiers, including Comcast Corp., AT&T
Credit Holdings Inc. and Banc of America Leasing & Capital LLC, said
Tuesday that those procedures would not help in resolving the financing
issues.
href='http://news.cincypost.com/apps/pbcs.dll/article?AID=/20061004/BIZ/61004…'>Read
more .
id='5'>Unions at Mesaba Offer to Take Cuts
Union leaders at Mesaba
Airlines say they're willing to cut labor costs by 15 percent to keep
the commuter airline flying, the
size='3'>Detroit Free Press reported today.
The joint proposal from unions representing pilots, flight attendants
and mechanics came a day after Mesaba asked a judge to keep those groups
from striking if the airline imposes lower wages and benefits on
workers. Mesaba, which had been seeking 19.4 percent cuts over 5 1/2
years, declined to comment on the contract proposal, which the company
saw for the first time Tuesday. After spending nearly a year in
bankruptcy, Mesaba is running out of cash. As Northwest cuts its fleet,
the airline has failed to reach concessionary contracts with its three
largest unions.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20061004/BUSINESS05/610…'>Read
more .
Enron
Distributes $3.37 Billion to Creditors
Enron Corp. on Tuesday said it
distributed about $3.37 billion to its creditors, bringing the total
creditor distribution since November 2004 to $9.40 billion, Reuters
reported yesterday. Enron said the latest distribution will consist of
$3.34 billion in cash and $34.4 million in shares of Portland General
Electric Co. The company said that, including the latest distribution,
it has now paid back 26 percent of its creditors' bankruptcy claims, and
its Enron North America unit has paid back 29 percent of creditors'
bankruptcy claims.
href='http://www.nytimes.com/reuters/business/business-energy-enron.html?page…'>Read
more .
Refco
Opposes $7M Fee Hike for Houlihan Lokey
Refco Inc. has filed an
objection to its unsecured creditors’ motion to pay Houlihan Lokey
Howard & Zukin $9 million for its services, instead of the
originally planned $2 million,
size='3'>Portfolio Media reported yesterday.
The fee addition that the unsecured creditors’ committee is
seeking would give Houlihan an additional $7 million transaction fee on
top of the firm’s current $150,000 monthly fee, as well as an
additional $50,000 monthly fee and a new transaction fee for services in
connection with transactions involving Austrian bank Bank Für
Arbeit und Wirtschaft AG (BAWAG). Under the terms of Houlihan’s
current retention order, the U.S. Trustee has the right to object only
to monthly fees, but Trustee
size='3'>Diana G. Adams argued that the
proposed order should be revised to provide that she retain the right to
object to the payment of all components of the compensation
structure.
id='8'>Winn-Dixie Proposes New Board
As Winn-Dixie Stores Inc.
emerges from bankruptcy protection, a completely new board of directors
has been proposed to run the supermarket chain, the Associated Press
reported yesterday. Under its proposed reorganization plan, Peter Lynch,
the current president and CEO, is the only person that will remain from
the current nine-member board. Lynch joined Winn-Dixie in December 2004,
shortly before the company filed for chapter 11 in February 2005
after suffering huge financial losses and loss of vendor credit stemming
from intense competition with other grocers, including Publix and
w:st='on'>
size='3'>Supercenters
In the past three years, Winn-Dixie has reported losses of almost $1.3
billion, including $361 million in fiscal year 2006, which ended June
30, down from $832 million in 2005.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/10/03/AR20061…'>Read
more .
In related news, a former
Winn-Dixie employee has slapped the bankrupt supermarket chain with a
proposed class action lawsuit accusing the company of failing to pay
proper overtime wages,
size='3'>Portfolio Media reported yesterday.
On Monday, Terrence Palmer sued Winn-Dixie in the U.S. District Court
for the Middle District of Florida, charging the company with violating
the Fair Labor Standards Act. The plaintiff, who is seeking class action
status for his suit, contends that he never received time-and-a-half
payment for working more than the standard 40-hour week. The suit marks
the latest setback for Winn-Dixie, which last week encountered stiff
opposition to its reorganization plan—filed in
August—including from the government and the U.S. Trustee
overseeing the case. The grocery store chain said it had been
hoping to end its 19-month chapter 11 case on Oct. 31.
id='9'>Activist Organization Still in Bankruptcy
The financial collapse of
a prominent organization that aids gay Latinos has left federal
officials scrambling to reclaim hundreds of thousands of dollars in
allegedly misspent government money, the Akron
Beacon Journal reported today. Once active in
California, Florida and other states with large Latino populations, the
National Latina/o Lesbian, Gay, Bisexual and Transgender Organization
filed for chapter 7 protection and the federal government is looking to
reclaim more than $700,000 from the now-defunct organization that gay
activists called LLEGO. LLEGO closed in the summer of 2004, claiming
assets totaling $37,521 and debts totaling $543,948, including $45,000
owed to American Express, at the start of its chapter 7
proceedings.
href='http://www.ohio.com/mld/ohio/news/politics/15670668.htm'>Read
more .