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October 2, 2003
Industry Sheds Jobs Even as Output Rises
U.S. industry shed jobs again in September even as business activity
expanded for the third month straight, an influential survey showed on
Wednesday, Reuters reported. On the positive side, new orders reached a
high for the year, while construction figures showed that home-building
rose to record levels in August. However, analysts fear September
payrolls will show a fall for the eighth straight month when the figures
are released Friday. 'There is nothing here that offers signs of
encouragement,' said Norbert Ore, head of the committee that compiles
the survey for the Institute for Supply Management, referring to the
jobs outlook. 'The rate of decline seems to be slowing ... but I don't
see much change in the employment picture in the next six to 12 months,'
he added, reported the newswire.
Separately, CBSMarketwatch.com reported that the number of
married-couple families in which both spouses were employed declined
sharply in 2002. The drop of 368,000 is the first recorded since the
Bureau of Labor Statistics began reporting income characteristics of
families in 1993.
Senate Passes Bankruptcy Compromise
Workers at companies that go bankrupt in Wisconsin would be first to
recover up to $3,000 each of unpaid wages before banks could collect on
loans owed by the company, under compromise legislation approved Tuesday
by the state Senate, the Milwaukee Journal Sentinel reported. The
provision giving employees limited priority over banks when a bankrupt
company's assets are distributed came in an amendment to a financial
modernization bill-a piece of legislation long sought by both banks and
credit unions in Wisconsin. The so-called 'wage lien' issue has bogged
down the legislation for years, with Democrats insisting that employees
at bankrupt firms be first in line to collect wages and compensation
they are owed when a company is liquidated. Banks have insisted that
their liens continue to come first, claiming they would be more
reluctant to make some business loans if they do not have priority in
bankruptcies.
As a compromise, the bankers proposed letting workers get their money
first-but with a cap of $3,000. After the workers received that amount,
banks could lay claim to the company's assets. If a worker was due more
than $3,000, he or she could seek the remainder after the lenders were
paid, if there is money left. To read the full article, point your
browser to
href='http://www.jsonline.com/bym/News/sep03/173815.asp'>http://www.jsonline.com/bym/News/sep03/173815.asp.
Fed Officials Speak Out On Financial Literacy
It's no secret that financial products are becoming increasingly more
complex and while choice is a boon for consumers, new innovations can
make deciphering the offerings difficult for consumers, PBI Media
reported. To get out the message to banks and community organizations,
two Federal Reserve officials took the message on the road last week in
the hope that a continued push for better financial literacy will help
consumers make better decisions about their finances.
Today's financial world is highly complex when compared with that of a
generation ago, Fed Chairman Alan Greenspan told attendees at the 33rd
Annual Legislative Conference of the Congressional Black Caucus last
Friday, according to the newswire. 'Forty years ago, a simple
understanding of how to maintain a checking and savings account at local
banks and savings institutions may have been sufficient,' he said, PBI
reported. 'Now, consumers must be able to differentiate between a wide
range of financial products and services, and providers of those
products and services.
But this is not just an area of concern for consumers -- regulators,
lenders, community leaders, and consumer advocates also must continue to
be concerned about abusive home mortgage lending practices and other
consumer credit practices that target vulnerable populations. 'Financial
education is especially critical in the effort against these deceptive
practices,' Greenspan says. 'Consumers empowered with the information to
make educated financial choices are less susceptible to fraud and less
likely to become entangled in financially devastating credit
arrangements,' he said, reported the newswire.
Fed Governor Mark W. Olson addressed the impact of industry change on
consumers at the America's Community Bankers' 2003 National Compliance
and Attorneys Conference and Marketplace in San Antonio, Texas. To read
the full article, point your browser to
href='http://www.hoovers.com/free/news/detail.xhtml?ArticleID=NR200310011675…'>http://www.hoovers.com/free/news/detail.xhtml?ArticleID=NR200310011675….
Several Parties Oppose Confirmation Of GenTek Chapter 11 Plan
Several parties opposed court confirmation of GenTek Inc.'s chapter
11 reorganization plan this week as Tuesday's objection deadline passed,
according to court documents. Some notable parties that filed objections
Monday and Tuesday were the U.S. Environmental Protection Agency, the
U.S. Trustee acting in the case and Honeywell International Inc. The
U.S. Bankruptcy Court in Wilmington, Del., is slated to consider
confirmation of GenTek's plan at a hearing next Tuesday.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Covanta Energy's Plan Disclosure Statement Draws
Objections
Covanta Energy Corp.'s disclosure statement describing its chapter 11
plan faces limited objections from several parties, including the
official committee of unsecured creditors and a group of noteholders.
Although it supports the company's reorganization plan and believes that
the corresponding disclosure statement complies, for the most part, with
bankruptcy law requirements, the committee said in a court filing
Tuesday that the document doesn't provide enough information about
third-party releases. Companies operating under bankruptcy protection
must file a disclosure statement that accompanies a plan of
reorganization or liquidation. The statement outlines in nonlegal terms
how creditors will be paid, thereby helping eligible parties to decide
whether to support or reject the plan.
Provided by Daily Bankruptcy Review (
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Another Firm Under Inquiry Fires Workers
Prudential Securities has joined a growing number of financial services
companies that are rapidly responding to a widening investigation of
mutual fund trading practices by firing or suspending employees, the
New York Times reported.
Earlier this week, Prudential Securities dismissed a dozen brokers and
managers in offices in Boston, New York and Garden City, N.Y., an
executive briefed on the situation said yesterday. The employees aided
market timing, or the rapid trading of mutual fund shares for short-term
gains, the executive said. The dismissals come weeks after Prudential
acknowledged that its fund sales practices were being investigated by
the secretary of the commonwealth of Massachusetts, as well as the
Securities and Exchange Commission, NASD and the New York attorney
general's office, reported the newspaper.
ENRON
Task Force Probing Enron Builds Up Its Staff
The Justice Department task force working to root out fraud at Enron
Corp. has hired six prosecutors in recent weeks, preparing for a new
phase of the complex investigation, the Washington Post reported.
The task force began its work in January 2002, just one month after
Enron filed for bankruptcy protection. So far prosecutors have charged
nearly a dozen defendants at Enron and several outside the company with
taking part in a multibillion-dollar fraud designed to conceal Enron's
mounting financial problems. Now the task force is gearing up for three
trials in Texas early next year.
Leading the prosecution of the Fastows will be Linda Lacewell, formerly
a federal prosecutor in Brooklyn, where she won a high-profile case
against mobster Salvatore 'Sammy the Bull' Gravano. John Hemann, an
assistant U.S. attorney in San Francisco who has unraveled complex
securities fraud at McKesson Corp. and Media Vision Technology Inc.,
among others, will work on the Andrew Fastow case. David Hennessy, who
cracked down on organized crime and drug rings as a prosecutor in
Brooklyn and in Massachusetts, will work on the Lea Fastow trial,
reported the newspaper.
Employee Suit Against Enron to Proceed
A federal judge ruled on Wednesday that a lawsuit brought by employees
against former Enron Corp. Chairman Kenneth Lay and the energy giant's
pension plan administrator, Northern Trust, can proceed, Reuters
reported. U.S. District Judge Melinda Harmon in a 329-page ruling issued
in Houston on Wednesday denied requests by Enron, Lay and bank holding
company Northern Trust, which ran Enron's 401(k) plan, to be removed
from the suit. The lawsuit was brought by former Enron employees who
accuse the company and others of improperly encouraging or requiring
them to keep Enron stock in their pension accounts.
The suit says Enron and others had a fiduciary duty to employees to make
sure the pensions and 401(k) plan were funded with prudent investments.
The plaintiffs claim the defendants knew the stock was artificially
inflated and should have diversified the plan's holdings. Enron said its
lawyers were reviewing the decision and had no comment. Representatives
for Lay and Northern Trust could not be reached for comment late on
Wednesday, reported the newswire.
Owens Asks Mississippi High Court to Revive Asbestos Suit
Building materials maker Owens Corning on Wednesday asked Mississippi's
highest court to revive its suit demanding that cigarette makers share
the cost of asbestos settlements, the company said, Reuters reported.
The suit, thrown out by a lower state judge more than two years ago, is
the latest effort by a company beset with asbestos liabilities to seek
reimbursement for billions paid to workers with lung damage.
Owens Corning and other asbestos companies have argued unsuccessfully in
the past that smoking added to the health risk of workers exposed to
asbestos and that tobacco companies should share in their compensation.
Mississippi's Supreme Court could deliberate up to six months before
ruling on the latest case, an Owens Corning spokesman said. The court
heard arguments from Owens Corning and opposing cigarette makers,
including Altria Group Inc., parent company of Philip Morris USA. Owens
Corning has operated under chapter 11 bankruptcy protection since late
2000 following a slew of asbestos-related claims, reported the
newswire.
MatlinPatterson Raises about $600 Million for New Fund
Distressed debt fund MatlinPatterson Asset Management, one of the
largest stakeholders in bankrupt telephone company MCI, has raised
nearly $600 million for a new $2 billion distressed debt fund, people
close to the firm said, Reuters reported. The New York firm, led by
former Credit Suisse First Boston banker David Matlin, held its first
close last month for the new fund, MatlinPatterson Global Opportunities
Partners II LP, despite a tough fundraising environment, sources said.
The firm expects to reach its final goal early next year, doubling its
$2.2 billion under management, sources said. The fundraising comes while
Matlin has posted strong gains in his high-risk gamble in MCI, which
filed for bankruptcy protection in July 2002 in the wake of an $11
billion accounting scandal, reported the newswire.
Core-Mark Welcomes Bids as it Mulls Bankruptcy Exit
Core-Mark International Inc., which distributes packaged goods to
convenience stores, said on Wednesday it is entertaining bids for the
company, Reuters reported. The last remaining piece of bankrupt food
distributor Fleming Cos. Inc. hired buyout and advisory firm Blackstone
Group to help it explore strategic options, including a possible
reorganization. Core-Mark and Fleming filed for bankruptcy protection
under chapter 11 on April 1, 2003. Core-Mark Chief Executive Michael
Walsh said the company, which operates as a separate business and legal
entity from its parent Fleming, has sustained positive cash flow and
intends to maximize recovery for its creditors.
San Francisco-based Core-Mark said it expects final bids by December, at
which point it would focus on its strategy to emerge from chapter 11
bankruptcy protection. Preliminary bids will be due Nov. 3, Reuters
reported.
US Airways Seeks Nasdaq Listing
US Airways Group has filed an application to list its shares on the
Nasdaq, including 39.3 million class A common shares held by entities
that took equity stakes in the company during its bankruptcy, Reuters
reported. US Airways spokesman David Castelveter said the total amount
of shares listed on the Nasdaq if the filing is approved would be 57.4
million shares, including those shares that were issued to the company's
unions as part of its restructuring. US Airways emerged from chapter 11
protection on March 31.
The application, filed with the U.S. Securities and Exchange Commission
(SEC) late on Tuesday, also seeks to register the 39.3 million shares.
Warrants for those shares were issued at a price of $7.42 and are
currently held by four entities that took equity stakes in the airline
as part of its reorganization, according to SEC documents, Reuters
reported.
NEG Delays Transfer of U.S. Power Units to Banks
PG&E Corp.'s bankrupt National Energy Group (NEG) unit said it
postponed until December the transfer of six power plants to the banks
that have financed their construction and operation, Reuters reported.
On Sept. 30, NEG was to turn over four plants to a group of lenders led
by French bank Societe Generale and two plants to a group of lenders led
by Citigroup's Citibank subsidiary to avoid default on the loans used to
build and operate the facilities. A spokeswoman at NEG said the parties
sought the delay 'to allow more time to finalize the complicated
transactions.' The transfer to Societe Generale is now set for Dec. 5,
while the Citibank transfer is set for Dec. 10, reported the
newswire.
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