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March 20, 2006
Changes Raise Concerns on Pension Bill
The pension bill now
being completed in a House-Senate conference committee would actually
weaken the pension system, according to a little-noticed analysis by the
Pension Benefit Guaranty Corporation (PBGC), the
face='Times New Roman' size='3'>New York Times
size='3'>reported on Sunday. The agency’s report projects that the
House and Senate bills would lower corporate contributions to the
already underfinanced pension system by $140 billion to $160 billion in
the next three years. “It takes a better economist than me to
understand how reducing contributions by that much is going to protect
benefits and put the system on a sounder footing,” said Jeremy I.
Bulow, an economist at
w:st='on'>
size='3'>Stanford
face='Times New Roman'
size='3'>University
Both pieces of legislation — one passed by the House and the other
by the Senate, both by overwhelming majorities — do contain
measures that would reduce some of the lapses and inaccuracies that the
current pension law permits. They would also increase the premiums that
companies pay to the PBGC, an agency grappling with a $23 billion
deficit. The House-Senate conference committee intends to reconcile the
bills before April 15, when the next round of corporate pension
contributions are due. But the White House already warned in November
that President Bush might veto any bill that extended too much special
pension relief to individual companies and industries.
href='http://www.nytimes.com/2006/03/19/business/19pension.html?_r=1&ei=5094&en=aedadeb0f2299749&hp=&ex=1142744400&oref=slogin&partner=homepage&pagewanted=print'>Read
more.
name='2'>S&P Warns Against Chapter 11
Manipulation
Ratings agency Standard
& Poor's cautioned that more auto suppliers may choose
bankruptcy as a strategic means of escape as they face tough
economic conditions and daunting legacy costs,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported on Friday. A S&P report expressed concern that
suppliers would view bankruptcy as a tactical move rather than as a last
resort as it is intended. “Bankruptcy has some strategic attention
for certain participants in the challenged
w:st='on'>
size='3'>U.S.
size='3'>auto supply sector, as it could allow suppliers to effectively
reduce all manner of costs as well as gain back a more balanced pricing
relationship with automaker customers,” the report stated. S&P
is particularly worried that employers will use bankruptcy as a means of
ducking their labor costs, citing Tower Automotive’s
recent request
to reject its union agreements. “This may be quickly moving up the
list of reasons for a company to consider bankruptcy protection in
the
face='Times New Roman'
size='3'>U.S.
size='3'>,” according to the report.
name='3'>Bondholders, Insurers Oppose Owens
w:st='on'>
size='3'>Corning
size='3'>Plan
Following in the
footsteps of shareholders, the bondholders and insurers of Owens Corning
have taken aim at the company’s proposed chapter 11 reorganization
plan, Portfolio
Media reported on Friday. Certain
equity-holders have opposed the plan, claiming that it is based on an
“improper settlement” with the company’s creditors
that would allow the lenders to recover 150 percent of their claims. The
bondholders and insurers, including Lehman Brothers, King Street Capital
Management, Century Indemnity Co. and Central National Insurance Co.,
are seeking to block the plan from being sent out for creditor approval.
The objections of this group of equity-holders echo those made by
shareholders earlier this year. Under the recently amended
reorganization plan, shareholders stand to receive nothing, which has
led to a flurry of activity on their part. The case is
face='Times New Roman' size='3'>Owens Corning,
chapter 11 petition number 00-03837-JKF, in the
face='Times New Roman'>
w:st='on'>
size='3'>U.S.
size='3'>Bankruptcy Court for the District of
Delaware.
Dana
Maneuvering Around New Bankruptcy Law
Beleaguered auto parts
manufacturer Dana Corp. has sought a court order that would prevent
members of its creditors' committee from sharing private information
with creditors they
represent, which is viewed as an attempt to navigate around a provision
of the new bankruptcy law,
size='3'>Portfolio Media reported on Friday.
The Toledo, Ohio-based company filed court documents on Wednesday
arguing that it was unclear whether the new law could require a
creditors’ committee to share confidential data with any creditor
in its constituency, as part of its information-sharing duties.
According to court papers, the company maintains that if it were forced
to share private information with every creditor involved in its
bankruptcy proceedings, it would, among other things, eventually
discourage Dana from sharing materials with the official committee. The
case is Dana
Corp., bankruptcy petition number
06-10354-brl, in the U.S. Bankruptcy Court for the Southern District of
New York.
name='5'>Bankrupt International Galleries Inc. Prepares for
w:st='on'>Sale
International Galleries
Inc. is preparing to sell itself after filing for chapter 11 bankruptcy
protection on Jan. 31, the
size='3'>Dallas Business Journal reported on
Friday. Despite IGI’s early success, the privately held company
imploded, partly because of a 2005 article that ran under that headline
in a bilingual
face='Times New Roman' size='3'>Chicago
newspaper called La Raza, according to the company's
bankruptcy filing. The article 'suggested that we went to China and
bought our prints for $1, counterfeited names of artists and came back
and sold them to the Hispanic public,' says Paul Myer, IGI's president
and CEO. In addition, he said, the article falsely claimed that 'we were
a Ponzi scheme and we were illegal.' Last
November, the company's credit card processors became concerned about
IGI's fiscal health and withheld some $2.8 million in credit-card
charges that were due to the business, according to Myer and bankruptcy
documents. According to interviews, court and bankruptcy records and
other documents, the once-high-flying company could have as many as
30,000 creditors.
href='http://www.bizjournals.com/dallas/stories/2006/03/20/story2.html?page=2'>Read
more.
General
Motors
id='6'>GM, UAW Close to
Deal
General Motors Corp.,
bankrupt auto supplier Delphi Corp. and the United Auto Workers resumed
talks Sunday on a sweeping plan to slash thousands of high-paying auto
jobs through accelerated retirement offers, the
face='Times New Roman' size='3'>Detroit News
size='3'>reported today. The three sides are close to reaching a deal to
offer retirement packages to tens of thousands of hourly workers at GM
and
size='3'>Delphi
efforts at both companies. The plan also is designed to clear positions
at GM for Delphi workers, thousands of whom worked at the automaker
before it divested
size='3'>Delphi in 1999. Sources said
the sides have agreed on the size and scope of the effort to eliminate
jobs through buyouts and retirement offers. However, the 'flowback'
of
size='3'>Delphi
main hurdle remaining in the negotiations.
href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20060320/AUTO01/603200334/1148'>Read
more.
name='7'>GM Board Seeks Probe of Mistakes in
Bookkeeping
The board of General
Motors Corp. called for an investigation into the cause of newly
uncovered accounting errors that forced the troubled auto maker to delay
filing its annual report and could postpone a critical sale of part or
all of its financing arm, the
size='3'>Wall Street Journal reported
today.Philip Laskawy, the director in charge of the audit committee,
asked for an analysis of the last-minute problem. Jerome B. York, the
newly elected board member who represents billionaire Kirk Kerkorian,
GM's largest shareholder, followed up by pushing for an in-depth review
of what GM would do to fix its accounting problems. Wagoner said little
during the meeting and did not offer an explanation for the accounting
issue or the delay, these people said. GM’s Chairman and Chief
Executive Rick Wagoner did not offer an explanation for the accounting
issue or the delay, but GM’s CFO Frederick Henderson told the
board he hoped to have preliminary answers next week.
href='http://online.wsj.com/article/SB114261055772101341-email.html'>Read
more.
w:st='on'>
name='8'>Alabama
face='Times &amp;#13;&amp;#13;&amp;#10;New
Roman' size='3'> Auto Parts Supplier Oris Files for Chapter
11
Auto supplier Oris
Automotive Parts Alabama Ltd. filed for chapter 11 reorganization March
16 in the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Birmingham,
w:st='on'>
size='3'>Ala.
AutomotiveNews.com reported on Friday. Oris makes trailer hitches,
receiver and electrical kits, roof rack systems, interior carrier
systems, accessories for off-road vehicles, windstops for convertibles
and mounting plates for fifth-wheel couplings. Citing rising material
costs and a lack of business for the filing, Oris' primary customers
include Mercedes-Benz, BMW and Volkswagen. The company lists assets
between $1 million and $10 million and liabilities of $10 million to $50
million. Oris is asking for debtor-in-possession financing of $6 million
from Regions Financial Corp. The company says in court documents it's
'essentially out of cash' after it made payroll Tuesday.
href='http://www.autonews.com/apps/pbcs.dll/article?AID=/20060317/REG/60317034/1003'>Read
more.
id='9'>Experts Find
size='3'>Colorado
size='3'>Bankruptcy Numbers Affected by
Misinformation
experts say there is a great deal of misinformation that may be
discouraging people from filing for chapter 7 bankruptcy if they need
to, according to today’s Greeley
(
Tribune. Consumers filed for bankruptcy in
droves last October, racing to beat the deadline before federal law
changed. Local bankruptcy attorney Eric Carlson said
that many people believe they can't wipe out credit card debts or simply
can't file at all. Regional economist John Green said bankruptcy filings in
Larimer and Weld counties jumped 300 percent in two months just before
the deadline: from 400 last August to 1,353 in October.
Filings in November dropped to a mere 20 cases and rose
to only 44 in last month. 'The fear that they won't qualify will
gradually go away,' said Deb Dahlinger, co-owner of the credit
counseling service We the People.
href='http://www.greeleytrib.com/article/20060320/BUSINESS/103200071/-1/rss04'>Read
more.
w:st='on'>
name='10'>San Diego
face='Times New Roman' size='3'> to Pay into Troubled Pension
Fund
Mayor Jerry Sanders said
that
size='3'>will make a required $162 million payment to its troubled city
employees' pension fund and will look for ways to provide it with
additional funding, according to Reuters on Friday. 'We see this number
as a floor,' Sanders told reporters at a press conference. 'We now know
what the bottom is and we can work our way up from there.'
size='3'>San Diego
pension fund face a deficit estimated to be as high as $2 billion,
caused by agreements in 1996 and 2002 to increase benefits while
allowing the city to pay less into the fund than the retirement system
needed. The U.S. Securities and Exchange Commission is investigating the
city's failure to disclose the deficit to bond investors; five former
pension fund officials have been indicted for concealing information,
and six former city employees face state conflict-of-interest charges.
Actuaries said on Friday the pension fund's deficit is about $1.39
billion and the fund is about 68 percent funded.
href='http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-03-18T004645Z_01_N17114439_RTRIDST_0_ECONOMY-SANDIEGO-PENSIONFUND.XML'>Read
more.
name='11'>Enron Prosecutors Look to Former Treasurer
Testimony
As the government heads
this week into the home stretch of its case against two former Enron
chief executives, the prosecutors will be looking to the testimony of
Ben F. Glisan Jr., the only former top executive who has already been
sentenced in the Enron debacle, according to today’s
New York Times
size='3'>. Glisan, the former treasurer, is the last major witness for
the government before the case shifts to the defense and to what
promises to be memorable testimony by the defendants, Jeffrey K.
Skilling and Kenneth L. Lay. Glisan worked closely with Andrew S.
Fastow, the former chief financial officer, on developing
special-purpose entities, like the Raptors group, that both men have
said in plea deals were used to inflate earnings and hide debt. The
government is also expected to use Glisan to try to connect the dots for
jurors hearing a complex case.
href='http://www.nytimes.com/2006/03/20/business/businessspecial3/20enron.html?pagewanted=print'>Read
more.
International
name='12'>Unions Vow to Fight British Government in Court over Lost
Pensions
British unions
representing tens of thousands of workers who lost pensions when their
employers went bankrupt have vowed to press ahead with legal action
against the government, the Scotsman reported on Friday. The
union Community said it was 'angry' at the British government's
rejection of the Parliamentary Ombudsman's findings that it misled
people over the security of final-salary pension schemes. The only hope
for the 85,000 victims was with a court case expected to be heard in the
European Court of Justice in
w:st='on'>
size='3'>Luxembourg
size='3'>next spring, it said. Community and the Amicus union have
issued a legal claim on behalf of 1,000 pension scheme members at Allied
Steel and Wire of Cardiff and Sheerness in
w:st='on'>
size='3'>Kent
who lost the bulk of their pensions when the company was declared
bankrupt in 2002. The unions claim the government failed adequately to
implement the European Insolvency Directive, which they argue would have
protected occupational pension benefits of workers whose employers
became insolvent.
href='http://business.scotsman.com/index.cfm?id=428702006'>Read
more.
href='http://business.scotsman.com/index.cfm?id=428702006'>