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May 16, 2005
Senate to Resume Asbestos Legislation Markup
The Senate Judiciary Committee will resume marking up the asbestos
bill on Wednesday, and Judiciary Chairman Arlen Specter (R–Pa.)
hopes to finish work on it before the Memorial Day recess,
CongressDaily reported. So far, five Republicans and two
Democrats support the legislation. The markup session is expected to
continue on Thursday and possibly next
week.
Democrat Wants Congress to Block Pension Defaults
Congress should impose a six-month moratorium to keep bankrupt
companies such as United Airlines from dumping their workers’
pension plans onto a federal agency, a Democratic lawmaker said on
Friday, Reuters reported. Rep. George Miller (D–Calif.) worries
this could lead to a rash of other defaults among struggling air
carriers with acute pension woes, as well as other industries. He and
Rep. Jan Schakowsky (D–Ill.) introduced legislation on Friday to
stop plan terminations for six months while Congress considers what else
should be done.
Gas Prices Weigh on Consumer Sentiment
U.S. consumer sentiment dropped in early May as gasoline prices hit
record highs according to data released on Friday, Reuters reported.
Other data released on Friday showed U.S. inventories grew slightly
below expectations in March, implying economists are on track with
upward revisions to expectations for first-quarter economic growth.
Analysts said the report was likely to reinforce views that the Federal
Reserve will continue hiking interest rates at a “measured”
pace in order to head off inflationary pressures.
Bankruptcy Filings Up Ahead of New Law
More Iowans have recently filed bankruptcy in anticipation of a law
change that makes it harder to avoid paying all debts, woi-tv.com
reported. The bankruptcy courts in the state report filings by Iowans
were up 25 percent in March and about that much in April. In the
state’s Northern District, filings set a record 704 cases in
March. Read the article at
href='http://www.woi-tv.com/Global/story.asp?s=3346502'>www.woi-tv.com/Global/story.asp?s=3346502.
The Rush to File Bankruptcy
With six months before the federal bankruptcy law changes, bankruptcy
attorneys and their clients are rushing to file for bankruptcy
protection under lenient rules now in effect, the Buffalo
News reported. They’re worried that new requirements,
recently passed by Congress at lenders’ behest, will make it
harder for people to write off most of their debts after Oct. 17. Read
the full article at
href='http://www.buffalonews.com/editorial/20050515/1071178.asp'>www.buffalonews.com/editorial/20050515/1071178.asp.
Separately, an op-ed column in the Toledo Blade focuses
on the new bankruptcy law. Read the article at
href='http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20050514/OPINION04/505140311'>www.toledoblade.com/apps/pbcs.dll/article?AID=/20050514/OPINION04/505140311.
Amtrak Executives Predict Bankruptcy
Amtrak executives predicted last week that the railroad could go
bankrupt within months, forcing serious service cuts and other drastic
measures, unless it receives a significant budget boost from Congress,
Newsday reported. “I think we will probably limp into
next year, but by ‘limp’ I mean we’ll have like $20
million in the bank,” David L. Gunn, Amtrak’vs president and
CEO, said. “At this point, we do not have a lot of options left to
conserve cash.” Read the article at
href='http://www.newsday.com/news/nationworld/nation/bal-te.amtrak13may13.story'>www.newsday.com/news/nationworld/nation/bal-te.amtrak13may13.story.
United
Reinventing United, With Bankruptcy as a Tool
United’s bankruptcy has given it the opportunity to take steps
other carriers have found difficult to take, like repeatedly cutting
wages and benefits, renegotiating or rejecting aircraft leases, and
terminating its four employee pension plans, which releases United from
$3.2 billion in pension obligations over the next five years, the
New York Times reported. “United has become a much
more formidable competitor than we were” when it filed for
bankruptcy protection, Tilton acknowledged in an interview last week.
Read the full article at
href='http://www.iht.com/articles/2005/05/13/business/wbunited.php'>www.iht.com/articles/2005/05/13/business/wbunited.php.
Read an editorial on United Airlines by William Buckley at
href='http://news.yahoo.com/s/ucwb/20050514/cm_ucwb/whosemoneyisit'>news.yahoo.com/s/ucwb/20050514/cm_ucwb/whosemoneyisit.
Machinists, Mechanics Press Efforts With UAL
Commencement last week of a trial in U.S. Bankruptcy Court on whether
to void the current labor contracts of two unions representing workers
at UAL Corp.’s United Airlines appeared to have jump-started
parallel negotiations between the airline and its mechanics, ramp
workers and customer-service agents, the Wall Street
Journal reported. Eager to stave off a ruling by Judge Eugene
Wedoff that would annul current labor agreements and allow United to
impose new terms, the International Association of Machinists union and
the Aircraft Mechanics Fraternal Association stepped up negotiations
with UAL, the newspaper reported.
Collins and Aikman Braces for Bankruptcy
Auto parts supplier Collins & Aikman has warned of significant
near-term liquidity problems and said CEO David Stockman resigned,
prompting analysts to say bankruptcy was almost inevitable, Reuters
reported. Collins & Aikman said prior 2005 forecasts should not be
relied on, though it has obtained waivers to address immediate liquidity
issues arising from credit downgrades at Ford Motor Co. and General
Motors Corp., which in turn strained its own receivables facility.
Delta, Continental Eye Asset Sales to Boost Cash
Delta Air Lines Inc. and Continental Airlines Inc. may sell stakes in
their regional units to bolster cash depleted by high fuel costs and
tough competition, their finance chiefs said on Friday, Reuters
reported. The two airlines are trying to avoid becoming the next to file
for bankruptcy in an industry hit by high fuel prices and fierce
competition from low-cost airlines. Both had previously suggested they
hoped to raise funds by selling the regional carriers.
Canada’s Stelco Agrees to Court-appointed Mediator
Stelco Inc. agreed to allow a court-appointed mediator help hammer
out a plan to bring the insolvent steelmaker out of creditor protection,
the company said late on Thursday, Reuters reported. Canada’s
biggest steelmaker, which has been under bankruptcy protection since
January 2004, said the mediator would be expected to take charge of the
process.
US Airways and America West Are Said to Speed Merger Talks
US Airways and America West Airlines have accelerated talks on a
potential $1 billion merger, which would require about $500 million in
new capital, people briefed on the discussions said last night, the
New York Times reported. The discussions could wrap up by
the end of the week, these people said. But they cautioned that the
discussions were complicated, and that a deal would require approval by
a federal loan board and the bankruptcy court.
An article in the Wall Street Journal focuses on how the
US Air and America West talks highlight the changing industry. Read the
full article at www.wsj.com
(subscription required).
Protest by MCI Shareholders May Push Qwest to Rejoin Battle
Investor protest at MCI Inc.’s shareholder meeting on Monday
could prompt Qwest Communications International Inc. to launch a new
effort to acquire the company, according to people familiar with
Qwest’s thinking, the Wall Street Journal reported.
Several large MCI investors say they will withhold their votes to
re-elect directors at the annual meeting as a protest against the
company’s acceptance of an $8.44 billion bid by Verizon
Communications Inc. over a $9.74 billion offer from Qwest. Qwest
management will closely watch the results, and some believe a high
percentage of withheld votes will be a cue to re-enter the battle. The
company believes that at least 30 percent of the votes could be
withheld, these people say.