April 222008

 

New
Century Employees Object to Chapter 11 Plan

The committee
representing employees of New Century Financial Corp. objected to the
bankrupt subprime lender's proposed chapter 11 plan, saying that the
plan lumps employees' $43 million in pension savings with other assets
to be shared by general unsecured creditors,

size='3'>Bankruptcy Law360 reported yesterday.

The beneficiaries’ committee sued New Century, the lender's
unsecured creditors’ committee and pension plan trustee Wells
Fargo Bank in June last year, seeking to protect their retirement trust
from being consolidated with the lender's other assets in its chapter 11

estate. The employees told the court that their objections to the
proposed chapter 11 plan would be moot if they prevailed in their
adversary proceeding, but that the plan is scheduled to be put to a vote

before the outcome of that litigation is known. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=53669'>Read

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name='2'>Homebuilders’ Strategy Draws Criticism

As Congress works to
address the housing market downturn, the National Association of Home
Builders (NAHB) has been the most aggressive lobby in pressing its
case, ruffling many feathers in Washington, D.C., its advocacy
strategy,
size='3'>CongressDaily reported today. NAHB
first took an unusual and controversial step to suspend its political
contributions until lawmakers passed legislation to help the industry.
It then became one of the strongest advocates for a Senate tax break
that would allow businesses currently in the red greater ability to
obtain refunds from previous years when they were profitable. Under
current law, businesses can carry back such net operating losses for
only two years; the change would extend it to four years at an estimated

cost of $6.1 billion over 10 years. The provision was included in a
Senate-passed housing bill, but it is now on life support after coming
under fire from the right as ineffectual and the left as an unwise
corporate bailout.

Airlines

name='3'>Aloha Pilots Set Saturday Deadline for
Strike

Aloha Airlines Inc.'s
pilots have filed a complaint accusing the bankrupt air carrier of
repudiating its collective bargaining agreement with the pilots' union
and threatening to go on strike on Saturday if Aloha and the union can't

come to terms,
size='3'>Bankruptcy Law360 reported yesterday.

The Air Line Pilots Association International filed the adversary
complaint on Friday in the U.S. Bankruptcy Court for the District of
Hawaii, seeking injunctive relief and arguing that Aloha violated the
Railway Labor Act. Aloha filed for chapter 11 protection on March 20 and

stopped passenger operations on March 31, though it's still running its
cargo service. The union will continue to try to work out a deal, but if

no agreement is reached by April 26, the pilots may strike. 

href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=53711'>Read

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name='4'>Senators Urge Airlines to Include Employees in Merger
Talks

Senate Democratic leaders

on labor and aviation issues asked Delta and Northwest to include their
employees in merger talks,
size='3'>CongressDaily reported today.
“As we have seen in the past, support of airline employees is
essential to the success of any contemplated merger,” said a
letter signed by 26 Senate Democrats including Health, Education and
Labor Chairman Edward Kennedy (D-Mass.), Commerce Chairman Daniel Inouye

(D-Hawaii) and presidential candidates Sens. Barack Obama (D-Ill.) and
Hillary Rodham Clinton (D-N.Y.). While some discussions have occurred
with the pilots’ union, the Democrats want the two companies
“to engage all of the relevant unions and employees in the ongoing

merger process.” They also want union representation at Northwest
to continue and “urge Delta and Northwest management to
demonstrate a genuine commitment to cooperative labor relations by
recognizing and bargaining with a majority of Delta or Northwest workers

that identifies a union representative.”

name='5'>Interstate Bakeries Requests Extension for Confirmation
Hearing

Interstate Bakeries Corp.

has asked a bankruptcy court for an extension to consider confirmation
of its plan for reorganizing and emerging from chapter 11 protection,
the Kansas City
Star reported yesterday. A hearing was
originally set for Wednesday to consider the plan. The company said that

it has renegotiated its bankruptcy financing with new and existing
lenders, raising the amount available to $250 million from $200 million,

and extending the maturity date to Sept. 30 from June 2. Interstate
asked that a court hearing on the renegotiated debtor-in-possession
financing be held April 29. 
href='http://www.kansascity.com/business/story/584935.html'>Read
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name='6'>Struggling Online Retailer Files for
Bankruptcy

Online gift seller
RedEnvelope Inc. filed for chapter 11 bankruptcy protection on April 17,

agreeing to sell most of its assets to Creative Catalogs Corp. for $5.7
million, subject to court approval, the

size='3'>San Francisco Business Times reported

yesterday. RedEnvelope lost $4.3 million in the third quarter ended Dec.

30, compared with a profit of $5.3 million in the same quarter a year
ago. It had sales of $45.2 million in the quarter, down from sales of
$57 million a year earlier. With $12.3 million in cash and cash
equivalents as of the quarter's end, the company had only enough to pay
for its operations until the end of June. It had a $12.5 million credit
facility, but only $3.8 million of that was left as of Dec. 30. Wells
Fargo cut off the company's line of credit at the end of March. 

href='http://www.bizjournals.com/sanfrancisco/stories/2008/04/21/daily10.html?t=printable'>Read

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name='7'>Fabric Maker Files for Bankruptcy

Dan River Inc., a maker
of apparel fabric and bedroom linens, has filed for bankruptcy for the
second time in four years, the Associated Press reported yesterday. The
company, which filed its chapter 11 petition on Sunday, urged the U.S.
Bankruptcy Court in
w:st='on'>
size='3'>Wilmington,
w:st='on'>
size='3'>Del., to let it
borrow up to $32 million from GMAC Commercial Finance LLC so it can keep

its operations going. The company already owes GMAC $25 million under a
secured pre-bankruptcy loan.
face='Times New Roman' size='3'>Dan River
size='3'>didn't provide details in court documents about what prompted
it to file for bankruptcy along with affiliates Dan River Holdings LLC,
Dan River Factory Stores Inc., Dan River International Ltd. and The Bibb

Company LLC. 

href='http://biz.yahoo.com/ap/080421/dan_river_bankruptcy.html?.v=1'>Read

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name='8'>Linens 'n Things Looks to Avert Bankruptcy
Filing

Linens 'n Things Inc. has

begun taking drastic steps to stock its retail stores, as the firm's
Chairman and CEO Robert J. DiNicola said that he has just weeks to save
the company from a bankruptcy filing, the

size='3'>Wall Street Journal reported today.
The Clifton, N.J.-based home-furnishings company said yesterday that it
took the unusual and costly move of paying its largest vendors cash even

before the products arrive in stores. DiNicola called the emergency
measure 'temporary and certainly not ideal,' but said that it was needed

'to keep vendors comfortable with shipping to us ... and gets us through

our basic day-to-day requirements.' Between 60 and 100 of Linens' 1,000
vendors are being paid 'CBD,' or cash before delivery. In late March,
many key vendors stopped shipping to Linens, citing no pay or slow pay
from the retailer. 
href='http://online.wsj.com/article/SB120882429560033203.html'>Read
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name='9'>Bank of
w:st='on'>

size='3'>America
size='3'>’s First Quarter Card Losses Top $950
Million

Bank of America Corp. (BofA)
reported first-quarter 2008 net charge-offs in its credit card business
of $956 million, rising 6.9 percent from losses of $894 million in the
same period last year, CreditandCollectionsWorld.com reported yesterday.

Delinquencies of 30 or more days past due in BofA’s card portfolio

totaled $4.02 billion, growing nearly 9.8 percent from delinquent
balances of $3.66 billion in the first quarter of 2007. Delinquencies of

90 days or more for card borrowing increased more modestly at 3.5
percent from $1.99 billion in last year’s first quarter to $2.05
billion in the three months ended March 31. Higher charge-offs in home
equity loans, consumer loans and mortgages all contributed total net
charge-offs of $2.72 billion for the bank, which was 90 percent above
first-quarter 2007 total charge-offs of $1.43 billion. Home equity loan
losses were $496 million, vs. $17 million a year ago. 

href='http://www.creditcollectionsworld.com/article.html?id=20080421LM631BAZ&from=creditandcollectionnews'>Read

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name='10'>Banks' Credit Lines Get Stingier for Retailers,
Others

Banks are growing nervous about

some of the credit lines they extend to retailers, and in some cases are

shutting off the funding spigot altogether, Dow Jones Newswires reported

yesterday. Late Friday, big-box retailer Sears Holding Corp. said that
Bank of America Corp. had decided not to renew a $1 billion credit
agreement between the two companies under the deal's existing terms. As
a result, the agreement will expire in July. Also last week, apparel
maker Talbots Inc. said that Bank of America and another bank, HSBC
Holdings PLC, had canceled $265 million in letters of credit. 

href='http://money.cnn.com/news/newsfeeds/articles/djf500/200804211404DOWJONESDJONLINE000626_FORTUNE5.htm'>Read

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International

name='11'>Royal Bank of
w:st='on'>
size='3'>Scotland
size='3'>Seeks New Funds

Royal Bank of

size='3'>Scotland
size='3'>today became the latest lender to seek new funds to cover its
soured investments, saying that it would sell $23.8 billion of new
shares to current investors as it seeks to restore its capital base,
the New York
Times reported. The bank, the second-largest
British lender after HSBC Holdings, said that it was writing down
£5.9 billion in soured assets this year. Among the write-downs were

£1.9 billion on collateralized debt obligations, £1.75 billion

on exposure to monoline bond insurers and £1.3 billion on leveraged

loans. Losses to banks worldwide are approaching $300 billion since the
start of the meltdown in global credit markets last summer, and the
International Monetary Fund estimates that total losses could reach $1
trillion. 

href='http://www.nytimes.com/2008/04/22/business/worldbusiness/22cnd-bank.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read

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name='12'>UBS Faults Blind Ambition for Subprime
Miscues

The Swiss banking giant
UBS, which has written off more debt from the subprime crisis than any
other bank, conceded in a report yesterday that a blind drive for
revenue led it to take more risks than it should have, the
New York Times

size='3'>reported today. The 50-page report was released two days before

a shareholder meeting where bank executives are expected to seek
permission to shore up the balance sheet by another 15 billion Swiss
francs (about $14.7 billion). UBS,
w:st='on'>
size='3'>Switzerland
size='3'>’s largest bank, has written off about 38 billion Swiss
francs (about $37.3 billion) since the subprime crisis began last
summer, including $19 billion announced April 1. 

href='http://www.nytimes.com/2008/04/22/business/worldbusiness/22ubs.html?ref=business&pagewanted=print'>Read

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name='13'>Airline Cancels Bid for Alitalia

Air France-KLM said
yesterday that its offer to buy the struggling Italian airline Alitalia
for 139 million euros ($220 million) was “no longer valid,”
the Associated Press reported. Air France-KLM, which is based in

size='3'>Paris, said that
it had told Alitalia of the decision and that the Italian airline did
not meet the necessary conditions. Air France-KLM’s offer,
announced March 14, called for the layoffs of 2,120 Alitalia employees,
among other measures. Air France-KLM’s bid was the only offer on
the table, but negotiations broke down three weeks ago after the company

refused to accept Italian union demands.