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April 9, 2009
name='1'>U.S. Releases Aid to Auto Suppliers
The Treasury Department yesterday
gave cash-strapped auto suppliers the green light to begin shipping
parts with the promise that the government would guarantee payment,
the Washington
Post reported today.Treasury left it up to
General Motors and Chrysler to decide which suppliers would be eligible
for the aid. GM will initially get $2 billion in federal support, and
Chrysler will receive $1.5 billion. Ford declined to participate, saying
it had enough funds to support its supply base. In all, the government
said it is prepared to set aside $5 billion to help finance the
deals.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/04/08/AR2009040803893_pf.html'>Read
more.
SEC Fights
Effort to Push Madoff into Bankruptcy
The U.S. Securities and Exchange
Commission yesterday asked the judge in its case against Bernard L.
Madoff to put a stop to efforts by customers of Bernard L. Madoff
Investment Securities LLC to force the financier into involuntary
bankruptcy, Bankruptcy
Law360 reported yesterday. The SEC argued that
contrary to fears expressed by Madoff's customers that they will be shut
out of any recovery of missing assets, the agency will cooperate with
the U.S. Department of Justice and the Securities Investor Protection
Corp. to ensure that any assets will be distributed to victims and
creditors. The SEC also said that applying the Bankruptcy Code to
Madoff's assets was hardly necessary to secure an efficient distribution
of recovered assets to victims, and may complicate matters. The agency
argued that the forfeiture powers held by the U.S. Department of Justice
effectively cancel out any potential benefit from a bankruptcy
proceeding.
href='http://bankruptcy.law360.com/articles/96126'>Read more.
(Subscription required.)
Bank of
America to Boost Rates on Cards with Balances
Bank of America Corp. is raising
interest rates on as many as four million U.S. credit card customers who
carry a balance, becoming the latest bank to crack down on people who
don't pay off their bill every month, the
size='3'>Wall Street Journal reported today.
Starting with June account statements, any credit card customer who
carries a balance and has an interest rate below 10 percent will see his
or her rate jump into double-digit territory. The company said that the
changes would affect less than 10 percent of the bank's card customers
in the United States. The bank has 70 million card customers worldwide,
but doesn't break out the number of customers who are in the United
States. The bank's move follows similar rate increases that other banks,
including Citigroup Inc., JPMorgan Chase & Co. and American Express
Co., have implemented in recent months. The banks, facing rising
delinquencies, blame the current economic turmoil.
href='http://online.wsj.com/article/SB123922365800702453.html'>Read
more. (Subscription required.)
Ethanol
Producer Files for Bankruptcy
Aventine Renewable Energy
Holdings Inc., a U.S. ethanol producer that counts a unit of Citigroup
Inc. among its biggest investors, sought bankruptcy protection from
creditors after reporting a fourth-quarter net loss of $36.9 million on
March 16, Bloomberg News reported yesterday. The company listed debt of
$490.7 million and assets of $799.5 million as of Dec. 31 in chapter 11
documents filed on Tuesday. Six of the company’s affiliates also
filed for bankruptcy. Aventine joins producers including Renew Energy
LLC, Cascade Grain Products LLC and VeraSun Energy Corp. in filing for
bankruptcy as an oversupply of ethanol, fluctuating corn costs and
falling fuel prices hurt operations. The case is
face='Cambria' size='3'>Aventine Renewable Energy Holdings
Inc., 09- 11214, U.S. Bankruptcy Court,
District of Delaware (Wilmington).
href='http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCL1kYj8V4zM'>Read
href='http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCL1kYj8V4zM'>
SEC Outlines
Five Options for Restricting Short-Selling
SEC Chairwoman Mary Schapiro
yesterday announced five potential ways to restrict
short-selling,
size='3'>CongressDaily reported. One option
put forward for public comment is restoring a Depression-era rule that
prohibits short-sellers from making their trades until a stock goes at
least one cent above its previous trading price. That rule was lifted in
2007. Another option for restricting the practice, besides reinstating
the uptick rule, is a sort of 'circuit breaker' for stock prices. That
approach, in three variations, would force short sellers to sell shares
above the going market rate when they execute a short trade -- it would
only go into effect after a stock price has had a decline of 10 percent.
The fifth option, known as an upbid rule, would allow short-sellers to
come in only at a price above the highest current bid for the
stock.
href='http://www.sec.gov/news/press/2009/2009-76.htm'>Click here to
read the SEC release on the short-selling proposals.
Nevada
Regulators Gear Up for Casino Bankruptcies
Nevada's casino regulators are forming
a special team of securities experts, auditors and other staffers to
handle what they fear could be several bankruptcy and major debt
restructuring moves within the gambling industry, the Associated Press
reported yesterday. State Gaming Control Board Chairman Dennis Neilander
said in a letter to Nevada's industry licensees that the special team's
activity could disrupt some of the board's usual routine, but is needed
to help bring resorts out of bankruptcy. Neilander said the board and
its parent Nevada Gaming Commission may have to handle several cases
'within a limited timeframe,' and that's where the special GCB team will
be most needed. The team will include staffers drawn from the board's
seven divisions, covering areas including corporate securities, audits,
tax and license, technology, enforcement and investigations.
href='http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/04/08/state/n131649D83.DTL&type=printable'>Read
more.
name='7'>Knight-Celotex Files for Chapter 11
Knight-Celotex, the Northfield,
Ill., producer of fiberboard products used in construction applications,
said yesterday that it has filed for chapter 11, the
face='Cambria' size='3'>Chicago Tribune
size='3'>reported today. The building-products maker noted that the
filing was sparked when lender Bank of America froze the company's
accounts last week. Knight-Celotex, which is owned by investor James A.
Knight's Knight Industries LLC, has been in bankruptcy before.Celotex
Corp. was once a much larger building-products concern based in Tampa,
Fla., but it was swamped by a wave of asbestos litigation and filed for
chapter 11 in the 1990s.
href='http://www.chicagotribune.com/business/chi-biz-knight-celotex-chapter-11-april8,0,7629061,print.story'>Read
more.
to Pay Secured Debts Early in Chapter 11
Bankrupt renewable fuel
manufacturer VeraSun Energy Corp. has asked a judge to approve the
distribution of $107 million to settle senior secured bondholder debt as
the company moves forward with plans to sell more ethanol production
assets in order to resolve secured claims and preserve future resources
for unsecured credit payments,
size='3'>Bankruptcy Law360 reported yesterday.
Bankruptcy Judge Brendan L.
Shannon yesterday agreed to hear VeraSun's
motion to pay out $107 million to the senior bondholders out of
approximately $550 million in proceeds from the company's recent sale of
nearly all of its ethanol production facilities.The company hopes the
move will help it save millions of dollars in the long run, when it
turns to deal with debt from unsecured creditors, VeraSun said in court
documents.
href='http://bankruptcy.law360.com/articles/96064'>Read
more. (Subscription required.)
the Bailout as an Investment Tool
As part of its sweeping plan to
purge banks of troublesome assets, the Obama administration is
encouraging several large investment companies to create the bailout
funds for Americans to invest, the
size='3'>New York Times reported today.The
idea is that these investments, akin to mutual funds that buy stocks and
bonds, would give ordinary Americans a chance to profit from the
bailouts that are being financed by their tax dollars. The funds, the
thinking goes, would buy troubled mortgage securities from banks,
enabling the lenders to make the loans that are needed to rekindle the
economy. Many of the loans that back these securities were made during
the subprime era. If all goes well, the funds will eventually sell the
investments at a profit. If, as some analysts suspect, the banks’
assets are worth even less than believed, the funds’ investors
could suffer significant losses. Nonetheless, the administration and
executives in the financial industry are pushing to establish the
investment funds, in part to counter swelling hostility against the
financial industry.
href='http://www.nytimes.com/2009/04/09/business/09fund.html?_r=1&ref=business&pagewanted=print'>Read
more.
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