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February 15,
2008
name='1'>Countrywide Agrees to Provide Documents in Bankruptcy Case
of
size='3'>Pa.
size='3'>Homeowner
Countrywide Financial
Corp. has agreed to provide documents related to a loan issued to
a
size='3'>Pennsylvania
size='3'>homeowner who filed for bankruptcy, the Associated Press
reported yesterday. The California-based mortgage lender is facing
allegations that it fabricated letters to Sharon Diane Hill of
Monroeville, Pa. Countrywide withdrew a motion in federal bankruptcy
court that sought to limit information requested by Hill and bankruptcy
trustees looking into nearly 300 cases involving the company in western
Pennsylvania. The lending practices of Countrywide and other mortgage
companies have come under scrutiny amid a surge in home loan defaults
among borrowers with poor credit histories.
name='2'>Report Confirms Tersigni Overbilling in Asbestos
Cases
A Heller Ehrman LLP report has
found that L. Tersigni Consulting CPA PC improperly
face='Times New Roman'>overbilled four clients in
asbestos-related bankruptcies, giving probable cause that the bankrupt
consulting firm overbilled clients in all of its asbestos cases,
according to an examiner in the case,
size='3'>Bankruptcy Law360 reported yesterday.
L. Tersigni filed for bankruptcy in November after several groups
dropped the firm amid the fraud accusations. Prior to filing for
bankruptcy, L. Tersigni contracted with Heller Ehrman to investigate
claims that the consulting firm fraudulently overbilled its clients.
Based on the Heller Ehrman report, as well as investigations by
size='3'>U.S. T
size='3'>rustees and the Federal Bureau of Investigation, Hugh M. Ray, a
court-appointed examiner, said “it appears reasonably clear that
there is probable cause to believe that there were serious billing
irregularities in all of the 20 asbestos cases handled by L.
Tersigni.”
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=47136'>Read
more. (Registration required.)
New York Governor Sees
Potential Recapitalization among Bond Insurers
New York Governor Eliot
Spitzer said that the recapitalization of
w:st='on'>
size='3'>U.S.
size='3'>bond insurers hit by the subprime crisis may occur soon, but if
it fails, insurers can be forced to separate riskier activities from
their municipal bonds business, Reuters reported yesterday.
'The clear preference is a recapitalization of the
companies, something that could happen at some point. We would hope
shortly,' Spitzer said after testifying before a House Financial
Services subcommittee about the state of the bond insurance industry.
New York State Insurance Superintendent Eric Dinallo has been working
with banks on rescue plans for several of the bond insurers, which
guarantee $2.4 trillion of debt. The companies are facing big losses
from insuring bonds linked to subprime mortgages and other risky assets.
Dinallo told reporters it was within the state of
w:st='on'>
size='3'>New York's power
to force bond insurers to restructure to separate their municipal bond
business from their riskier operations. Such a move would be an
'extraordinary' measure, he said, and the first step would be for the
bond insurers to present a plan to state regulators to separate into two
href='http://news.yahoo.com/s/nm/20080214/bs_nm/bondinsurers_spitzer_dc_2'>Read
more.
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht021408.shtml'>Click
here to read the written testimony from yesterday’s hearing in
the House Financial Services’ Capital Markets, Insurance and
Government Sponsored-Enterprises Subcommittee on the state of the bond
insurance industry.
name='4'>Lenders Predict Harsher Climate for Student
Loans
Amid a widespread
tightening of credit, some student lenders predict college loans will be
harder and more expensive to come by for the fall, the
face='Times New
Roman' size='3'>Wall Street Journal reported
today. Without a break in the credit crunch, such as stepped-up lending
by major banks, the situation could become far worse, these lenders say,
leaving many students unable to fund their educations. 'Unless
something changes in the marketplace, there will be a shortfall of funds
available to make student loans,' says Mark Valenti, president of the
Connecticut Student Loan Foundation, a nonprofit lender based in
size='3'>Rock Hill
w:st='on'>
size='3'>Conn.
subprime-mortgage crisis has driven investors away from the asset-backed
securities that are a crucial source of capital for many student
lenders, prompting smaller concerns like College Loan Corp. and Nelnet
Inc. to stop making certain kinds of loans. The market for auction-rate
securities, a type of financing vehicle tied to student loans, has also
seized up in recent days.
href='http://online.wsj.com/article_print/SB120295313581367065.html'>Read
more. (Registration required.)
name='5'>Municipalities Feel Pinch as Another Debt Market
Falters
The credit crisis paining
Wall Street is reaching out across the nation, afflicting
municipalities, hospitals and cultural touchstones like the Metropolitan
Museum of Art, the New
York Times reported today. Alarmed by the
running turmoil in the debt markets, investors have refused to buy
certain auction-rate securities that not long ago many regarded as
equivalent to cash. Even though the securities are long-term, banks hold
auctions periodically to set the interest rates. During the last three
days, almost 1,000 of these auctions failed because there were not
enough buyers. The Port Authority of New York and
w:st='on'>
Jersey now finds itself
paying a rate of 20 percent on $100 million of its debt, almost
quadruple its costs from a week ago. The Metropolitan Museum of Art is
now paying 15 percent on auction securities. It is unclear how long such
high rates will persist, or when the market for these instruments will
revive.
href='http://www.nytimes.com/2008/02/15/business/15muni.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
Approves Global Home Products Chapter 11 Plan
Bankruptcy Judge
Kevin Gross
size='3'>approved Global Home Products LLC chapter 11 plan, paving the
way for the former parent of glassware-maker Anchor Hocking to exit
bankruptcy protection, the Associated Press reported yesterday. Judge
Gross on Wednesday confirmed Global Home's reorganization plan, which
calls for majority shareholder Cerberus Capital Management to contribute
$8.5 million to pay off the company's creditors. Under the plan,
Cerberus, a
face='Times New Roman' size='3'>New York
private-equity firm, will retain its 97.75 percent stake
in the reorganized Global Home, and other current equity holders will be
given an opportunity to subscribe to a rights offering. Unsecured
creditors, owed somewhere between $80 million to $100 million, will
divide up $1 million. Global Home's unsecured creditors’ committee
href='http://biz.yahoo.com/ap/080214/global_home_products_bankruptcy.html?.v=1'>Read
more.
name='7'>Musicland Creditors Pursue Best Buy over
Transfers
Creditors of Musicland
Holding Corp. have said they plan to sue Best Buy Co., which once owned
Musicland, along with several former Musicland directors and officers,
to recover allegedly preferential payments made to Best Buy before
Musicland filed for bankruptcy,
size='3'>Bankruptcy Law360 reported yesterday.
Best Buy owned Musicland from 2001 to 2003. In 2003, it sold the
entertainment retailer chain to Sun Capital Partners Inc.
Musicland's creditors have
aggressively pursued companies that allegedly received preferential
pre-petition transfers from Musicland in the closing months of its
bankruptcy. The creditors filed a wave of lawsuits in September against
Quad/Graphics Inc., Afco Credit Corp., Giant Merchandising Inc. and
Pro/Phase Marketing Inc. in an effort to recover more than $1.2 million
in allegedly fraudulent payments.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=47164'>Read
more. (Registration required.)
name='8'>Fedders Plans More Chapter 11 Auctions
Fedders Corp. has asked
for bankruptcy court permission to auction its
w:st='on'>
size='3'>U.S.
size='3'>residential heating, ventilating and air conditioning business
and some Chinese assets, the Associated Press reported yesterday. The
troubled air conditioner maker filed for chapter 11 protection in August
2007, and has been selling business units to raise money for creditors.
In the latest round of sales, Fedders has opening offers of $13.25
million from Elco Holdings Ltd. for U.S. assets used in the HVAC
residential business; $3.6 million from Electra Air-Conditioning
(Shenzhen) Co. Ltd. for research and development assets; and $100,000
from Electra Shenzhen for tooling assets in China, the company said
Wednesday. Liberty Corners, N.J.-based Fedders is asking the U.S.
Bankruptcy Court in
w:st='on'>
size='3'>Wilmington
w:st='on'>
size='3'>Del.
March 11 auction date for the businesses.
href='http://www.chron.com/disp/story.mpl/ap/fn/5543010.html'>Read
more.
face='Times New Roman' size='3'>
name='9'>Union
size='3'> Expects 15,000 to 20,000 GM Workers to Take
Buyouts
The head of the United
Automobile Workers union said yesterday that he expected 15,000 to
20,000 workers to leave General Motors during a new round of buyouts,
and that GM would replace nearly all of them with lower-paid employees,
the New York
Times reported today. UAW president Ron
Gettelfinger said that the number of workers who take buyouts would
certainly be lower than in 2006, when 34,410 people, about one-third of
GM’s unionized work force, accepted deals. If 15,000 left in this
buyout round, that would be about 20 percent of the 74,000
UAW-represented workers who remain at GM.
href='http://www.nytimes.com/2008/02/15/business/15union.html?ref=business&pagewanted=print'>Read
more.
International
id='10'
name='10'>U.K.
face='Times New Roman' size='3'> Pension Funds Face a Shortfall of
Billions
U.K. companies face
having to add billions of pounds to their pensions liabilities under
plans to be unveiled by the regulator to force them to use more
realistic projections of how long workers will live after they retire,
the Financial
Times reported today. The standard the
Pensions Regulator is to propose next week is tougher than that used by
99.5 percent of U.K. pension schemes and will increase stated
liabilities for companies by 6 to 8 percent, even for those already
adopting the standard now in use. For roughly a third of all schemes,
the increase in disclosed liabilities will be as much as 15 to 20
percent and could force them to set aside more cash to fill shortfalls.
The regulator is concerned that companies making insurance-like promises
are ignoring scientific evidence showing longer lives at older ages. As
a result, insurers and employers may not be putting away enough cash to
pay annuities and pensions in full.
href='http://www.ft.com/cms/s/0/bb5f6b74-db46-11dc-9fdd-0000779fd2ac.html'>Read
more.
href='http://www.ft.com/cms/s/0/bb5f6b74-db46-11dc-9fdd-0000779fd2ac.html'>