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Hatch Optimistic about Chances for Asbestos Bill
Senate Judiciary Chairman Orrin Hatch (R-Utah) reiterated his optimism
on Tuesday about prospects for enacting asbestos litigation reform in
the 108th Congress, pegging its chances above those of a class-action
bill, which he suggested would be more at the mercy of the trial bar,
CongressDaily reported. An increasing number of lawmakers,
including Democrats, are coming to grips with the scope of the problem,
Hatch said in an interview. To date, around 55 asbestos defendant
companies have filed for bankruptcy protection, and more than 1,000 U.S.
corporations have been named as asbestos defendants, reported the
newswire. 'We have an interest in keeping these companies alive,' Hatch
said, noting that their viability ensures victims of asbestos-related
illness will have a source of compensation.
According to CongressDaily, industry sources have indicated
that Hatch is apt to introduce a bill in March, possibly in conjunction
with Senate Judiciary ranking member Patrick Leahy (D-Vt.). Hatch
conceded on Tuesday that collaboration would not necessarily lead to a
joint bill with Leahy. He listed other Democrats he said would be
instrumental in the debate, including Sens. Edward Kennedy (D-Mass.),
Carl Levin (D-Mich.) and Christopher Dodd (D-Conn.), reported the
newswire.
Family Research Council President Criticizes GOP Leaders
Family Research Council President Ken Connor is miffed at House GOP
leaders for calling Rep. Christopher Smith (R-N.J.) on the carpet for
his efforts to upend a procedural vote on bankruptcy legislation late
last year, CongressDaily reported. Smith and other anti-abortion
Republicans helped defeat the rule on the bill, which included a
provision that they said would treat abortion clinic protesters unfairly
in bankruptcy. House Judiciary Chairman Sensenbrenner (R-Wis.) has said
he plans to reintroduce the bankruptcy bill this year minus the
abortion-related provisions, and the measure is expected to pass easily.
According to the newswire, in a memo to his organization's members on
Monday, Connor said: 'Corporate interests made huge financial
investments in Republican candidates, and they expected a 'return' on
those investments after the election.'
State of Competition in Telecom Industry Hearing Held
Yesterday
Sens. John McCain (R-Ariz.) and Fritz Hollings (D-S.C.) yesterday held a
full committee hearing on the State of Competition in the
Telecommunications Industry, addressing telecommunications competition,
local competition and broadband proceedings pending at the Federal
Communications Commission. Witnesses included FCC Chairman Michael K.
Powell and FCC Commissioners Kathleen Q. Abernathy, Michael J. Copps,
Kevin J. Martin and Jonathan S. Adelstein.
Sen. McCain said at the committee hearing that problems continue to
plague the telecommunications industry and that only the FCC can address
them. 'The same special interests responsible for drafting the Telecom
Act still walk these halls. The result has been legislative paralysis,'
McCain said. 'I ask you to look beyond these special interests, and make
decisions you believe are in the best long-term interests of the
American consumer, ' reported CongressDaily. Senators on the
panel stressed the need to protect competition and consumer interests,
as well as to help resolve problems arising from the bankruptcy of
telecom companies.
WORLDCOM
WorldCom Chief Outlines Initial Turnaround Strategy
WorldCom Inc. Chairman and Chief Executive Michael Capellas outlined an
initial 100-day turnaround plan that includes new executive appointments
and the launch of new products and services aimed at small and midsize
businesses, the Wall Street Journal reported. While Capellas
promised the company would act with 'an outrageous sense of urgency' and
make more cost cuts, he didn't announce a name change for the company or
that it would shed any business units. Some industry analysts had
expected WorldCom to assume the name of its long-distance unit, MCI. To
read the full article, point your browser to
href='http://www.wsj.com'>www.wsj.com (subscription required).
WorldCom Creditors Win Approval to Hire Pay
Consultants
WorldCom Inc. creditors received a bankruptcy judge's approval on
Tuesday to hire an outside consulting firm to help structure
compensation packages for company executives and board members, Dow
Jones reported. Pearl Meyer & Partners, the New York firm that was
involved in finalizing a pay package for new Chief Executive Michael
Capellas, will advise WorldCom's creditors' committee during the
company's search for new directors, said Ira Dizengoff, a lawyer
representing the official creditors' panel in WorldCom's bankruptcy. The
creditors' hiring of pay consultants comes at a time when WorldCom is
reshuffling its management team and board of directors, reported the
newswire.
UNITED AIRLINES
UAL Flight Attendants Object to Proposed Retention Plan
The Association of Flight Attendants has opposed a request by United
Airlines' parent company, UAL Corp., to implement a key employee
retention plan for some members of the carrier's management, saying the
proposed plan lacks business judgment and has unreasonable terms, Dow
Jones reported. The U.S. Bankruptcy Court in Chicago, which is
overseeing UAL's chapter 11 case, will consider the matter at a hearing
on Wednesday.
According to court papers obtained by Dow Jones Newswires Tuesday, the
flight attendant's union said the proposed plan would give members of
UAL management significant improvements in compensation and benefits
while the company's rank-and-file workers are expected 'to forfeit a
substantial percentage of their wages.' The objection said 'the proposal
comes at a critical juncture' in negotiations with the airline's
union-represented workers, reported the newswire.
United Bounces Check at Eagle County, Colo., Airport
Eagle County, Colo., officials are threatening to block United Airlines
flights from operating out of the resort town's airport until the
bankrupt airline pays its landing fees, the Associated Press reported.
United bounced a $15,000 check to the county to cover November's
charges. Officials also want the airline to pay its landing fees in
advance since it used its bankruptcy protection to cancel its 10-year
lease at the airport, a move that stunned county and ski resort
executives, reported the newswire. The lease expired on Wednesday and
Eagle County administrator Jack Ingstad said that was the deadline for
United to pay. Executives from the airline were expected in Vail on
Thursday for lease negotiations, reported the Associated Press.
Kmart Closes 326 Stores, Eliminates 37,000 Jobs
Kmart Corp., the 106-year-old discount retailer, will fire as many as
37,000 workers
and shut 326 more stores in order to reduce losses and emerge from
bankruptcy protection by April 30, Bloomberg News reported. The company
has arranged $2 billion in financing to exit bankruptcy, Chief Executive
James Adamson said on a conference call with analysts and investors. The
1,800-store chain, which has about 220,000 employees, closed 283 stores
in the second quarter. Restructuring expenses will be about $1.7
billion, reported the newswire. Competition from Wal-Mart Stores Inc.
and Target Corp. has driven chains ranging from Ames Department Stores
Inc. to Bradlees Inc. out of business in recent years. Kmart's survival
depends on how well it can win back customers with cleaner stores and
better stocked exclusive merchandise, analysts said, reported
Bloomberg.
Despite Drought, Few File for Chapter 12
In 1987, a watershed year for that decade's farm crisis, 569 Nebraska
farmers filed for debt protection under chapter 12-the section of
federal bankruptcy law specifically designed to help farmers get back on
their feet financially, the Lincoln Journal Star reported. In
2002, a year of decimating drought, a year forecast as the second lowest
for net farm income since 1984, only 30 farmers chose chapter 12 as a
way out. To read the full article, point your browser to
href='http://www.journalstar.com/nebraska.php?story_id=14809'>http://www.journalstar.com/nebraska.php?story_id=14809.
Allegheny Energy Expects More Time to Discuss Loans in
Default
Allegheny Energy Inc., owner of utilities in five states, said it
expects banks to give it more time to renegotiate at least $1.3 billion
in loans, the third extension since it defaulted on them in October,
Bloomberg News reported. The company had been given until yesterday to
resolve the talks with Citigroup Inc., J.P. Morgan Chase & Co. and
other banks over as much as $2 billion in new loans.
Hagerstown, Md.-based Allegheny has said it may seek bankruptcy
protection if it's unable to refinance the loans. The company has about
$5 billion in debt, including $1.3 billion in bank credit lines. Of
that, $654 million is due by June, reported the newswire.
Seven Seas Converts Involuntary Bankruptcy to Voluntary One
Seven Seas Petroleum Inc., the oil and natural gas explorer whose
creditors forced it into bankruptcy court last month, agreed to convert
its case to a voluntary chapter 11 filing, Bloomberg News reported.
Holders of a majority of the company's $110 million in senior
subordinated notes filed an involuntary petition for chapter 7
bankruptcy after the company defaulted on the bonds, Seven Seas said in
December. On Monday, the company filed a document with the U.S.
Bankruptcy Court in Houston consenting to the bankruptcy and converting
the case. The filing only includes the parent company and not its
subsidiaries, Seven Seas said in a statement, reported the newswire.
Bankruptcy for Diocese 'an Option'
The Catholic Diocese of Tucson may file for bankruptcy because of
expenses from sexual misconduct lawsuits involving priests, the
Associated Press reported. 'We do not have unlimited resources,'
Coadjutor Bishop Gerald Kicanas said. 'Bankruptcy has to be an option.'
The diocese released a report showing it spent more than $1.5 million in
the past 10 years on counseling, treatment, sustenance of priests and
legal costs of priests accused of sexual misconduct, reported the
newswire. The total does not include about $15 million the diocese paid
last February to settle 11 lawsuits from plaintiffs claiming priests
sexually abused them when they were altar boys in the 1960s, '70s and
'80s. The diocese has borrowed from southern Arizona parishes and owes
the parishes more than $4.3 million, reported the newswire. The diocese
had a total budget deficit of about $7.1 million through June 30,
according to the report.
British Energy, Qwest Among 59 Companies Near Default, S&P
Says
British Energy PLC, Qwest Communications International Inc. and Ziff
Davis Media Inc. are among 59 companies on the verge of defaulting, many
from the telecommunications and media industries Standard & Poor
said, Bloomberg News reported. The number of issuers having S&P
credit ratings of CCC or lower and that are either on watch for further
reduction or have negative outlooks, has been boosted by 'Argentine
defaults and continued weak credit conditions in Europe,'' Diane Vazza,
managing director of S&P's global fixed-income research, said in a
research report, reported the newswire.
Texas Attorney General: Enron Bankruptcy Costing Millions in
Fees
Texas Attorney General Greg Abbott is getting impatient with Enron
Corp.'s bankruptcy proceedings, which he says are draining millions of
dollars in legal fees from taxpayers, former employees and investors,
the Associated Press reported. Abbott on Monday accused the company's
attorneys of 'lining their pockets' with fees that could reach $1
billion at the current rate of spending -- with no real chance of
reorganizing under federal bankruptcy laws. Houston-based Enron has
spent more than $300 million on professional fees since filing what was
then the largest corporate bankruptcy in U.S. history on Dec. 2, 2001,
reported the newswire.
Kaiser Aluminum Sues to Protect 2 Affiliates from Liens
Kaiser Aluminum Corp. has sued the Pension Benefit Guaranty Corp. in
bankruptcy court, seeking to protect two nonbankrupt affiliates from
potential liens when Kaiser fails to make a required pension
contribution on Wednesday, Dow Jones reported. In a suit filed on
Tuesday, the aluminum maker asked the U.S. Bankruptcy Court in
Wilmington, Del., to extend some of the Bankruptcy Code's protections to
Trochus Insurance Co., of Bermuda, and Volta Aluminum Co. Ltd., of
Ghana. Unlike Kaiser and 26 other affiliates, Trochus and Volta aren't
under chapter 11 protection, reported the newswire.
Nine Kaiser affiliates filed for chapter 11 on Tuesday morning to
protect their assets from the liens. Kaiser and 17 affiliates had filed
for chapter 11 early last year amid significant near-term debt
maturities, increased asbestos litigation and growing retiree medical
and pension obligations, Dow Jones reported. In Tuesday's suit, Kaiser
asked the court to extend automatic stay provisions to Volta and
Trochus, saying its ability to reorganize successfully could be hurt if
the liens hit the two companies.
No Bankruptcy for Attorney with Loan Debt
An attorney so overwhelmed with student loans and so disillusioned with
the profession that he gave up his practice and moved to France cannot
use the U.S. Bankruptcy Code to escape responsibility for his
educational debts, a bankruptcy judge has held, the New York Law
Journal reported. Chief U.S. Bankruptcy Judge Stephen D. Gerling
said that while he is sympathetic to the predicament faced by many
debt-ridden law school graduates, the Bankruptcy Code allows discharge
of their student loan debts only on a showing of 'undue hardship' - a
burden the court said James E. Stern cannot sustain. To read the full
article, point your browser to
href='http://www.journalstar.com'>www.law.com.
Viasystems Wins Judge's Approval of Bankruptcy Recovery Plan
Viasystems Group Inc., a maker of circuit boards for telecommunications
equipment and computers, won a U.S. bankruptcy judge's approval of its
plan to shed $730 million in debt and emerge from chapter 11, Bloomberg
News reported. The plan allows buyout firm Hicks, Muse, Tate & Furst
Inc. to retain control of the company by exchanging bonds and bank debt
for new shares. U.S. Bankruptcy Judge Allan L. Gropper in
Manhattan approved the plan yesterday.
Office Space Provider Files for Bankruptcy in New York
Regus PLC, Europe's largest provider of temporary office space, filed
for chapter 11 bankruptcy protection a month after selling 58 percent of
its U.K. business to avoid running out of money, Bloomberg News
reported. In four separate court filings, Regus and three corporate
subsidiaries listed assets of $887.5 million and debts of $468 million.
The company did not immediately comment on why it filed for bankruptcy.
Regus shares, which fell 80 percent in 2002, have almost doubled this
month, amid speculation that Regus might merge its money-losing U.S.
business with Frontline Capital Group's HQ Global Workplaces Inc. Also,
a New York-based investment firm, Indigo Capital LLC, raised its stake
in Regus and said it might be interested in a takeover bid, reported the
newswire.
FAO Wins Approval to Use Cash Collateral to Finance
Bankruptcy
FAO Inc., owner of the FAO Schwarz and Zany Brainy toy-store chains, won
a bankruptcy judge's approval for temporary use of cash collateral to
finance its chapter 11 case, Bloomberg News reported. U.S. Bankruptcy
Judge Lloyd King in Wilmington, Del., granted the company's request a
day after it filed for bankruptcy protection from creditors. FAO can use
the funds until Jan. 29 when it can request an extension, Bloomberg
reported. The amount of available money will be based upon a budget the
company has submitted. FAO plans to close 75 to 80 stores, or almost a
third of its outlets. The company has lost money for eight years as
consumers have cut back on spending for FAO's expensive toys. The Zany
Brainy chain has been hurt by competition for its educational toys from
discounters such as Wal-Mart Stores Inc., analysts said, reported the
newswire.
Conseco Wins Final Approval for $150 Million Bankruptcy Loan
Conseco Inc., the insurance and finance company that last month filed
the third-largest chapter 11 case, won final court approval for $150
million in financing to carry its money-losing Conseco Finance unit
through reorganization, Bloomberg News reported. Losses by Conseco
Finance, the biggest lender to mobile home buyers formerly known as
Green Tree Financial Corp., helped drag Conseco into bankruptcy.
Conseco's 1998 purchase of Green Tree saddled the company with $6
billion in debt.
U.S. Bankruptcy Judge Carol Doyle in Chicago said Lehman Capital can
provide $25 million of unsecured credit. The judge also decided JC
Flowers & Co. LLC and Fortress Investment Group LLC, which hope to
buy Conseco Finance for $1 billion, can provide $75 million of a $125
million secured loan, with U.S. Bancorp's U.S. Bank unit to provide the
rest. Doyle approved Conseco's hiring of Lazard Freres & Co. as
financial adviser for $250,000 a month plus expenses and another $11
million on the completion of restructuring, reported the newswire.
US Airways Needs U.S. Help on Pilots' Pension Plan, Siegel Says
US Airways Group Inc. needs federal legislation before the end of the
month to be able to continue the pension plan for its pilots, Chief
Executive Officer David Siegel said, Bloomberg News reported. The
airline, which is trying to emerge from bankruptcy and has a $3.1
billion shortfall for all its pension plans, wants legislation that
would compel the Pension Benefit Guaranty Corp. to let the company make
$300 million a year in contributions for seven years and set up a
separate payment plan for the other $1 billion, Siegel told a Senate
Appropriations subcommittee.The pension agency, set up to pay retirement
benefits when a plan fails, lacks the legal authority to accept US
Airways' proposal, said the agency's director, Steven Kandarian,
reported the newswire.
Bryden Submits Offer to Keep Bankrupt Senators
Ottawa Senators majority owner Roderick Bryden and an unnamed partner
submitted a bid for the bankrupt hockey team and arena, the team said,
meeting yesterday's deadline that was imposed by an Ontario Superior
Court of Justice, Bloomberg News reported. Bryden's bid would have to be
approved by the team's creditors, which include Covanta Energy Corp.,
the Canadian Imperial Bank of Commerce and FleetBoston Financial Corp.
If the creditors don't approve Bryden's bid, Game Plan LLC, a
Boston-based firm that advises on acquisitions of sports teams, will
manage a sale of the club.
Rand McNally to File for Bankruptcy Protection
Rand McNally & Co., the nearly 150 year-old maker of the Rand
McNally Road Atlas and the Thomas Guide, said it plans to
file for chapter 11 bankruptcy protection, Bloomberg News reported. The
company wants to restructure and cut its debt to attract new investment
and continue operating, outside spokesman John Dillard said. Rand
McNally and a committee of senior and subordinate lenders agreed on a
plan to recapitalize the company, it said, reported Bloomberg. Leonard
Green & Partners is the majority holder of the company's senior
debt. If the company's debt holders support the plan, it will implement
a prepackaged chapter 11 restructuring, which would have no effect on
its customers, vendors or employees, Rand McNally said. The company
expects to get approval from its creditors by early February, it said,
reported the newswire.
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