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November
5, 2007
name='1'>October Consumer Bankruptcy Filings Climb to Highest
Monthly Level Since New Law Took Effect
October consumer
bankruptcy filings increased to 75,975, the highest monthly total since
the new bankruptcy law took effect two years ago, according to
size='3'>ABI
National Bankruptcy Research Center (NBKRC) also showed that the October
consumer filings represented a 10.23 percent increase from the 68,926
filings in September. Chapter 13 filings constituted 39.47 percent of
all consumer cases in October. The
percentage of chapter 13 filings may increase further if proposed home
mortgage modification legislation passes Congress. Experts at a House
hearing last week testified that 500,000 foreclosures could be averted
by using bankruptcy to write down mortgages in the falling housing
market.
href='http://www.abiworld.org/AM/Template.cfm?Section=Monthly_Bankruptcy_Statistics&Template=/MembersOnly.cfm&NavMenuID=3716&ContentID=46994&DirectListComboInd=D'>Click
here to view the October consumer filing
charts.
Mortgage
Lending
name='2'>Banks Concerned about Home Mortgage Modification
Legislation
Major U.S.
banks have voiced concerns about H.R. 3609, a bill that would
allow bankruptcy judges to rework the terms and conditions of home
mortgage loans for chapter 13 debtors, saying that such changes could
dry up mortgage funding and make the cost of owning a home more
expensive for all borrowers, the
size='3'>Wall Street Journal reported
today.
size='3'>'The bill will create risk -- and the markets will respond to
that risk by increasing the interest rate or the down payment that
homeowners pay,' said Scott Talbott, senior vice president of the
Financial Services Roundtable, an industry group. Lenders also fear
that the legislation could open the gates to other changes to the
bankruptcy law. Some in the Senate are considering a change to the law
that would provide relief to students struggling with qualified college
loans. The bill’s sponsor, Brad Miller (D-N.C.), said that his
legislation isn't an overture to revisiting the 2005 law as it largely
avoids making specific changes to the law and focuses more on the
treatment of mortgages in the bankruptcy process. House Judiciary
Chairman John Conyers (D-Mich.) said that his panel could vote on the
bill as early as this week. That could set the stage for action this
month by the full House.
href='http://online.wsj.com/article/SB119423058723682168.html?mod=us_business_whats_news'>Read
more. (Registration required.)
name='3'>Commentary: Congress Should Curb Abusive Lending Practices
by Mortgage Lenders
When members of the House
Financial Services Committee meet this week to consider H.R. 3915, the
Mortgage Reform and Anti-predatory Lending Act of 2007, they should not
weaken the provisions to curb abusive mortgage lending, according to an
editorial in today’s
size='3'>New York Times. The bill requires
those giving out loans to first document that borrowers have a
reasonable ability to repay, not just during a lower-rate introductory
period but also after rates rise. It would also eliminate yield-spread
premiums, incentives that reward mortgage brokers for putting borrowers
into the costliest loans possible, and require mortgage brokers to be
licensed and registered.
href='http://www.nytimes.com/2007/11/05/opinion/05mon1.html?ref=opinion&pagewanted=print'>Read
more.
The House Financial Services
Committee has scheduled H.R. 3915 for a mark-up hearing on Tuesday, Nov.
6, at 10 a.m. ET.
Autos
face='Times New Roman' size='3'>
name='4'>Delphi
size='3'> Amends Settlement with ERISA
Plaintiffs
In an effort to wind down
the consolidated ERISA class action pending against the company,
bankrupt auto parts maker Delphi Corporation has amended its settlement
agreement, Bankruptcy
Law360 reported on Friday.
w:st='on'>
size='3'>Delphi
agreement last Thursday to clarify that
w:st='on'>
size='3'>creditor State Street
size='3'>Bank and Trust Company, which had objected to the settlement,
should not be included with the settling parties referred to in the
document. While the settlement will permanently bar plaintiffs from
asserting similar claims against any of the defendants named in the
suit, the amended document reflects that
w:st='on'>
size='3'>State Street
formal objection, as well as its status as a non-settling defendant in
the suit, exempts the company from this provision.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=39115'>Read
more. (Registration required.)
In related news,
size='3'>Delphi
approval to extend its $4.5 billion bankruptcy loan into next year to
give it more time to exit chapter 11 protection after changing the terms
of its reorganization plan, the Associated Press reported on Friday. The
auto-parts supplier wants to extend the loan's maturity, slated for Dec.
31, to June 30, 2008, with an option to further extend the loan through
Sept. 30, 2008, according to court papers filed Thursday.
size='3'>Delphi
extension will allow it to keep borrowing on the loan as it works to
exit bankruptcy protection by the end of the first quarter of
2008.
href='http://biz.yahoo.com/ap/071102/delphi_bankruptcy.html?.v=1'>Read
more.
name='5'>UAW Seeks to Build Support for Ford Deal
United Auto Workers
President Ron Gettelfinger and his lieutenants will meet this afternoon
with local union leaders in hopes of building support for a tentative
contract reached with Ford Motor Co. over the weekend, the
Wall Street Journal
reported today.
size='3'>The agreement, which is regarded as a landmark concessionary
deal that will help the company better compete against Asia-based
rivals, must now be ratified by a majority of the 54,000 UAW-represented
employees at Ford. Ford's agreement gives the auto maker greater
concessions in terms of wages and retiree health care funding than the
union granted to General Motors Corp. and Chrysler LLC. With the
proposed contract's flexibility, Ford will reportedly seek to buy out an
additional 10,000 to 14,000 people in the next three years. The
tentative pact also allows Ford to unload billions in retiree health
care obligations from its books to a union-run trust fund, known as a
voluntary employees' beneficiary association, or VEBA. Ford's current
retiree health care obligation stands at about $22 billion.
href='http://online.wsj.com/article/SB119408167828081519.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
w:st='on'>
name='6'>London
face='Times





New
Roman'
size='3'> Fog Readies for Wind-Down, Plan
Vote
Bankruptcy Judge
Gregg Zive
size='3'>signed an order approving London Fog Group Inc.’s
disclosure statement and outlining voting procedures on the accompanying
liquidation plan, which the company and its unsecured creditors’
committee jointly filed in September,
size='3'>Bankruptcy Law360 reported on Friday.
Judge Zive also scheduled a confirmation hearing for Dec. 13 on the
joint plan for the company's liquidation. The deadline for any
objections to the plan is Dec. 3, and any ballot votes must be submitted
and received by Dec. 7. The company has already sold off the bulk of its
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=39165'>Read
more. (Registration required.)
name='7'>Commentary: Airlines, Unions Likely to Struggle on Starting
Point for Contract Talks
The concessions gained
from labor over the last few years – through bankruptcy or the
threat of bankruptcy – could create a contentious starting point
for airlines and unions as they will enter discussions on new contracts,
according to a commentary in yesterday's
size='3'>Dallas Morning News. The unions are
feeling pressure to win back some of the things they've given up over
the past few years, as airlines are facing pressure from low-cost and
regional carriers, just as fuel prices reach new highs, said Joe
McCartin, an associate professor of history at Georgetown University.
For example, the Allied Pilots Association, which represents fliers at
Fort Worth-based American Airlines Inc., is pushing to get back what its
members gave up in 2003 concessions.
href='http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-airlabor_04bus.ART0.State.Edition1.35b08ff.html#'>Read
more.
New
Citigroup Chairman Faces Tough Challenges
As Citigroup said
yesterday that it would take an additional $8 billion to $11 billion
write-down related to subprime mortgages and that CEO Charles O. Prince
III resigned, new Citigroup Chairman Robert E. Rubin faces tough
challenges to reshape the company amid a deepening crisis in the broader
housing and credit markets, the
size='3'>New York Times reported today. Rubin,
the former Treasury secretary who was recruited to the bank in 1999 as
an adviser to Citigroup founder Sanford Weill, was named chairman while
the board begins a search for a chief executive. Rubin said that he was
committed to the company, but did not give a timeframe for remaining as
chairman. Citigroup’s mortgage and home equity loan business has
been hit hard by the housing downturn, and executives anticipate further
losses. Its credit card portfolio, which includes big private-label
brands like Home Depot and Sears that cater to less credit-worthy
borrowers, could also come under strain.
href='http://www.nytimes.com/2007/11/05/business/05citibank.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
International
Japanese
Foreign
face='Times New Roman' size='3'>Language
size='3'>School
name='9'>Financial Scandal Leaves Thousands
Unpaid
The alleged financial
scandal and subsequent bankruptcy of Nova Corp. in Japan has left nearly
4,000 foreign-language teachers working for the company without pay for
weeks and some unsure of how they will return home, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported on Friday. The company had been on a hiring binge,
setting up recruitment offices in the
w:st='on'>
size='3'>United States
size='3'>and the
w:st='on'>United
Kingdom
size='3'>and visiting college campuses offering
jobs.
size='3'> Financial abuses by the company’s chief executive
are now coming to light as founder Nozomu Sahashi allegedly moved
profits from publicly traded Nova to his private company, according to a
court-appointed administrator. Nova’s instructors are now jobless,
and those who have lived from paycheck to paycheck are stuck in
href='http://online.wsj.com/article/SB119394083023779349.html?mod=hps_asia_inside_today'>Read
more. (Registration required.)
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