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Bankruptcy Headlines October 6
Job-cut Plans Jump in September
The number of job cuts planned by U.S. employers jumped to an
eight-month high in September, while hiring announcements fell sharply,
an outplacement firm said Tuesday, CNN/Money reported. The report came
just days before the government’s critical gauges of unemployment
and job growth in September, but did little to clarify how strong those
measures would be. U.S. business announced 107,863 job cuts in
September, up from 74,150 job cuts in August, a gain of 45 percent,
according to Chicago-based Challenger, Gray & Christmas, which keeps
track of monthly job-cut announcements, CNN reported. September’s
job-cut plans were 41 percent higher than the 76,506 cuts announced in
September 2003. On Friday, the Labor Department is scheduled to report
on September unemployment and non-farm payroll growth.
U.S. May Extend Failed Airline Passenger Protection
With a number of U.S. airline carriers facing bankruptcy or possible
failure, Congress is moving to extend a law that makes healthier
airlines pick up the slack should travelers become stuck with worthless
tickets, Reuters reported. An amendment slipped into the Senate
intelligence bill would push forward for another year a provision in the
2001 airline bailout law that requires stronger carriers, within reason,
to accommodate passengers whose travel plans are disrupted, the newswire
reported. Backup service applies only when seats are available and only
on overlapping routes. Fees are limited to $50 per round trip and
travelers have 60 days after an airline ends service to make alternative
plans or complete their travel. With the industry reeling three years
ago from its most severe downturn ever after the hijack attacks,
Congress and consumer interests were concerned that multiple airlines
might fail and leave millions of people with worthless tickets and
travel alternatives that were limited and expensive.
US Airways
US Airways Training Instructors Ratify Cost-savings Deal
Bankrupt US Airways on Tuesday said its flight crew training
instructors ratified an agreement that will help it cut costs by $1.6
million a year, Reuters reported. The deal, which will become effective
Oct. 1, 2004, is still subject to approval by the bankruptcy court. Last
week, the airline’s dispatchers approved a $4.5 million
cost-savings package.
US Air to Cut Some Management Jobs
Bankrupt US Airways Group. Inc. said on Monday it would eliminate
hundreds of management and nonunion jobs and impose wage and other cuts
to save more than $45 million annually as it tries to overhaul its
business and survive, reported Reuters. Chief Executive Bruce Lakefield
said in a special bulletin to employees that cuts in pay and other
compensation would average more than 20 percent. The austerity measures
would affect all 3,700 management and nonunion workers. Job cuts will
total more than 10 percent, or roughly 370, from the number of
management and nonunion employees that were in place at the start of the
year. The reductions will include positions already vacant as well as
openings created by employees who leave voluntarily. A senior airline
official could not pinpoint how many employees currently on the payroll
would lose their jobs, but said the company wanted to have its
management and nonunion workforce reorganized by the end of the
month.
Cancer Center Files for Bankruptcy
The Institute for Cancer Prevention (IFCP), well known for its
research linking smoking and lung cancer, filed for chapter 11 on Sept.
21 in the U.S. Bankruptcy Court for the Southern District of New York in
Manhattan, The Deal reported. It has been reported that the
organization allegedly misspent over $5 million in federal grants and is
being investigated by the Department of Justice. In IFCP’s
bankruptcy petition, there's no mention of anything connected to media
reports of scandalous allegations. Instead, the group blames its filing
on grants being canceled in late April, which affected its ability to
support “the extraordinary costs of its cancer
research.”
IFCP shut its doors and layed off most of its 95 employees on Sept.
10. Once known as the American Health Foundation, IFCP was founded in
1969, and is the only government-backed cancer center in the U.S.
devoted entirely to cancer prevention. The IFCP listed $5.94 million in
assets and $8.31 million in liabilities in its July 31 filing.
Ex-Enron Assistant Treasurer Gets Plea Deal
A former assistant treasurer at Enron Corp. agreed to plead guilty to
conspiracy to committing securities fraud on Tuesday and will cooperate
with prosecutors, according to court documents filed in U.S. District
Court in Houston, Reuters reported. Timothy Despain, who served as
assistant treasurer at the disgraced energy conglomerate between January
1999 and May 2002, admitted in an agreement with prosecutors he lied to
credit ratings agencies to manipulate the company’s credit rating.
Despain was scheduled to go before a U.S. District Court judge in the
Southern District of Texas later on Tuesday to formally enter his guilty
plea. Under sentencing guidelines, he could serve up to five years in
prison in connection with the charges.
Keystone Files Plan of Reorganization, Disclosure Statement
Keystone Consolidated Industries Inc. announced in a press release on
Monday that it filed a plan of reorganization and disclosure statement
with the U.S. Bankruptcy Court for the Eastern District of Wisconsin in
Milwaukee. Keystone previously filed a petition for reorganization under
chapter 11 of the U.S. Bankruptcy Code on Feb. 26, 2004. The company has
negotiated and obtained court approval of an amendment to the collective
bargaining agreement with the Independent Steel Workers Alliance.
Owens Corning Wins Approval to Combine Units in Bankruptcy Case
A judge ruled that Owens Corning can combine its assets with those of
its 17 units to speed the progress of the company’s plan to exit
bankruptcy, Bloomberg News reported. The ruling by U.S. District Judge
John Fullam in Philadelphia is a defeat for Credit Suisse First Boston
and other lenders. Credit Suisse, which led a group of banks that loaned
$2 billion to Owens Corning in 1997, had argued that allowing the
consolidation would give too much of the insulation maker’s assets
to asbestos victims.
Oglebay Bankruptcy Judge Rejects Reorganization Plan
A judge rejected Oglebay Norton Co.’s reorganization plan to
eliminate $180 million in debt, blocking the mining, mineral-supply and
shipping concern’s attempt to emerge from bankruptcy, Bloomberg
News reported. U.S. Bankruptcy Judge Joel Rosenthal said at a hearing in
Worcester, Mass., that the plan lacked sufficient information about how
the company would pay its asbestos claims.
United Air Shifts Focus to Overseas
United Airlines, seeing limited opportunity in the domestic market,
intends to sharply reduce its U.S. capacity by the end of 2005 and
spread its wings wider to more-promising overseas destinations, the
Wall Street Journal reported. Directors of parent UAL Corp.
signed off last week on the plan, which will boost its international
presence to 41 percent of its capacity from the current 35 percent,
according to Glenn Tilton, UAL’s chief executive. By the end of
its transformation, United hopes to receive more of its revenue from
flying between the U.S. and Asia, Europe and Latin America than from
domestic flights.
Adelphia May Not Accept Joint Bid for the Company
Adelphia Communications Corp. may refuse to allow cable giants
Comcast Corp. and Time Warner Inc. to make a joint bid for the cable
company, the Wall Street Journal reported. Adelphia’s
board is scheduled to discuss the possible joint bid at its regularly
scheduled board meeting. The board will examine whether the auction
would yield a higher price if Comcast and Time Warner bid against each
other rather than together, people familiar with the situation say. To
increase competition, the Adelphia board may decide not to allow Comcast
and Time Warner to submit a joint bid.
Delta, Pilots May Be Moving Closer to Agreement
Delta Air Lines and its pilots union have agreed to resume formal
negotiations this week, signaling that momentum is building toward
agreement on concessions the company insists it must have to save at
least $1 billion annually, the Wall Street Journal
reported. The two sides have been in on-again, off-again talks regarding
a concessions package for more than 15 months, as Delta piled up massive
losses and drifted steadily toward a bankruptcy-court filing.