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May 13, 2008
U.S. Trustee Program Resumes Debtor
Audits
The U.S. Trustee Program announced Friday that it resumed its
designation of cases subject to audit effective as of yesterday. The
USTP in January temporarily suspended its designation of cases subject
to audit for budgetary reasons. The USTP is preparing to resume
its designation of cases, although random audits will now be conducted
in 1 out of 1,000 cases (as opposed to 1:250 cases) filed in a judicial
district. As mandated in §603(a) of the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005, the USTP established procedures to
audit petitions, schedules, and other information in consumer bankruptcy
cases filed on or after Oct. 20, 2006.
href='http://www.usdoj.gov/ust/'>Click here for more
information.
Senate Talks Collapse on a Housing
Bill
Hope dimmed yesterday that Congress would act quickly to rescue
homeowners at risk of foreclosure after key Republican and Democratic
negotiators in the Senate said that they could not reach agreement on a
plan, the Washington Post reported today. Senate Banking
Committee Chairman Christopher J. Dodd (D-Conn.) and ranking member
Richard C. Shelby (R-Ala.) had been trying for more than a month to
develop a bipartisan proposal to ease the nation's housing crisis, but
talks recently broke down between the two sides. Yesterday, Dodd
unveiled his own housing bill, which would help troubled borrowers trade
exotic mortgages with escalating monthly payments for more affordable
loans backed by the federal government. It also would strengthen
regulation of mortgage giants Fannie Mae and Freddie Mac. Dodd scheduled
a committee drafting session for Thursday. The bill is similar to
legislation that passed the House last week despite a White House veto
threat and it is unlikely to win approval in the Senate without Shelby's
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/12/AR2008051202827_pf.html'>Read
more.
Wachovia Faces S.E.C. Inquiry Over
Auction-Rate Securities
Wachovia said yesterday that its securities unit and affiliates had
received inquiries and subpoenas from federal and state regulators over
auction-rate securities, the Associated Press reported. In a regulatory
filing with the Securities and Exchange Commission, Wachovia said that
the SEC and other regulators were seeking information concerning the
underwriting, sale and subsequent auctions of municipal auction-rate
securities and auction-rate preferred securities. According to the
filing, the bank and Wachovia Securities have also been named in a
lawsuit filed in March in New York. The lawsuit seeks class-action
status for customers who purchased and continue to hold such securities,
and it contends there were misrepresentations concerning the quality,
risk and characteristics of the securities.
href='http://www.nytimes.com/2008/05/13/business/13wachovia.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
GMAC to Pay Aloha Airlines' Workers
Previous Month's Back Pay
Lender GMAC Commercial Finance LLC said that Aloha Airlines' cargo
employees will be paid for work done since the middle of April, but
they'll have to wait a few more days to receive the back pay, the
Associated Press reported yesterday. Though it is not legally obligated,
GMAC said it had agreed to pay pilots and other cargo employees who
worked without pay for the last two weeks in April. The two weeks
represents the last pay period before Aloha converted its bankruptcy
from a chapter 11 reorganization to a chapter 7 liquidation. The back
pay will arrive after Saltchuk Resources Inc. closes its deal Wednesday
to acquire Aloha's cargo division, which handles 85 percent of Hawaii's
inter-island air cargo.
href='http://money.cnn.com/news/newsfeeds/articles/apwire/8d360ac074a14c90fc473b85179ac797.htm'>Read
more.
Vallejo Public Safety Officers Look to
Help City Avert Bankruptcy
Less than a week after the Vallejo (Calif.) City Council voted to
declare bankruptcy, police officers and firefighters submitted a new
proposal yesterday that aims to keep the city solvent, KGO-ABC7.com
reported today. The public safety officers are offering $10.6 million in
wage concessions. Police and fire would agree to a 6.5 percent salary
cut until next March, give up a current 1.7 percent raise and 11 percent
in scheduled raises. Other city employees would chip in a 3 percent
salary cut but get comp time in exchange. The public safety officers
would also give up 10 percent in scheduled increases over the next two
years.
href='http://abclocal.go.com/kgo/story?section=news/local&id=6138454&pt=print'>Read
more.
Leiner Settles DOJ Probe Into Drug Plant
Violations
Bankrupt vitamin producer Leiner Health Products Inc. has reached a
tentative settlement with U.S. investigators over alleged deficiencies
in the over-the-counter drugs manufactured at the company's South
Carolina plant, Bankruptcy Law 360 reported yesterday. Leiner
Health Products said Friday that it would plead guilty to one count of
mail fraud and forfeit $10 million to settle a U.S. Department of
Justice probe into the production, control and distribution of certain
over-the-counter drug products at the now-defunct plant in Fort Mill,
S.C. The FDA issued a warning to Leiner in August after an inspection at
the facility uncovered numerous “serious deviations” in its
manufacturing processes, some of which involved data manipulation and
inadequate testing procedures.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=55920'>Read
more. (Registration required.)
Fed Chair Sees Financial Market Turmoil Easing
Federal Reserve Chairman Ben Bernanke said today that turmoil in the
financial markets has eased somewhat, but the situation is still 'far
from normal,' the Associated Press reported. Bernanke noted some
improvements in the markets for certain mortgage-backed securities, such
as those backed by Fannie Mae and Freddie Mac, as well as some
fixed-rate mortgages and corporate debt. Moreover, the Fed's
extraordinary decision in March to let investment firms go to the Fed
for emergency loans 'seems to have bolstered confidence,' Bernanke
said.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/13/AR2008051300861_pf.html'>Read
more.
J.P. Morgan CEO Sees Bear Stearns
Merger Process Lasting Through 2009
JPMorgan Chase & Co. CEO James Dimon said that the entire
merger process between his company and its acquisition of Bear Stearns
will last through 2009, Dow Jones Newswires reported yesterday. JPMorgan
bought the failing Wall Street broker in March, when the Federal Reserve
orchestrated the takeover to avoid an imminent Bear Stearns bankruptcy.
Although the deal remains some weeks from closing, Dimon said yesterday
that JPMorgan has already found new job positions for 40 percent of Bear
Stearns staffers, even as Wall Street endures heavy rounds of layoffs.
JPMorgan's management expects the resulting Bear Stearns unit to
eventually produce annual earnings of $800 million to $1.13 billion, but
Dimon said yesterday that it will take some time for the purchase to
become profitable.
href='http://www.marketwatch.com/news/story/jp-morgan-ceo-sees-bear/story.aspx?guid=%7bA2FBEEEC-DDE4-4E81-87BA-242567BB77A3%7d&siteid=rss&print=true&dist=printTop'>Read
more.
Economy Puts Tight Squeeze on RV
Makers
Coachmen Industries Inc. and Fleetwood Enterprises Inc., two of the
country's largest recreational-vehicle makers, face serious cash
crunches brought on by high gasoline prices and the slumping housing
market, the Wall Street Journal reported today. Coachmen, whose
sales have declined 40 percent over the past three years, is borrowing
against the value of life-insurance policies it holds on employees and
retirees to try and ease the financial strain. So far, the Elkhart,
Ind.-based company has tapped about half the cash value of those
policies, according to filings with the Securities and Exchange
Commission. Fleetwood, which has posted five straight years of losses,
recently sold its Riverside, Calif., headquarters and is seeking buyers
for other properties in an effort to raise $100 million to finance a
looming bond redemption.
href='http://online.wsj.com/article_print/SB121063559677886679.html'>Read
more. (Registration required.)
International
Canadian Judge Urged to Back C$32
Billion Debt Plan
The group leading a restructuring plan for C$32 billion
($31.8 billion) of insolvent Canadian commercial paper urged an Ontario
judge to approve it, saying the only alternative would be a fire sale of
the notes, Bloomberg News reported yesterday. Noteholders approved the
plan, which would convert the asset-backed commercial paper into new
notes maturing within nine years, at a meeting in Toronto April 25. The
plan must be approved by Ontario Superior Court Judge Colin Campbell,
who is considering challenges from corporate noteholders, including Jean
Coutu Group Ltd. and Air Transat AT Inc., who oppose a provision that
bars them from suing banks and brokerages that sold the paper. The banks
agreed to provide funding for the plan on the condition they be
protected from lawsuits.
href='http://www.bloomberg.com/apps/news?pid=20601082&sid=aaIG2QE4jfsQ'>Read
more.
British Pension Buyout Deals Hit
Record in First Quarter
Pension buyout deals hit a record level in Britain in the first three
months of the year, according to data published yesterday by pensions
advisory firm Aon Consulting, Reuters reported. Transactions worth a
total of £2.2 billion were done during the quarter, £350
million pounds more than in the fourth quarter of 2007, the previous
record period. The rapid pace of deal-making seen at the end of last
year was maintained in the first quarter, with 87 transactions done in
the first three months of the year, with an average value of around
£25 million -- a significant increase on the average size of deals
done in the first three quarters of 2007. Increasing numbers of firms
are looking to offload their final-salary pension schemes as most plans
have now been closed either to new members or to future accrual of
benefits and their firms expect to pass them to buyout insurers at some
point in the future.
href='http://www.reuters.com/articlePrint?articleId=USNOA22406720080512'>Read
more.