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August 2, 2006
name='1'>Senate Leader Calls for Pension Bill to Pass
Unchanged
Senate Majority Leader
Bill Frist (R-Tenn.) said on Tuesday that pension reform legislation
must pass the Senate without amendments this week so it can be signed
into law by President Bush, Reuters reported yesterday. Frist said
lawmakers who want to change some of the bill's provisions affecting
airlines would have to find some other way to do that, rather than amend
the bill now. However, he also told reporters he wanted to first deal
with a tax bill this week that would roll back the estate tax, extend
tax cuts for education and research and raise the minimum wage. The
Congressional Budget Office said the pension bill would initially raise
federal tax receipts, but those would then decline as provisions
encouraging the use of tax-deferred 401(k) retirement savings plans and
Individual Retirement Accounts kick in. Over the course of 10
years, the bill would increase the
w:st='on'>
size='3'>U.S.
size='3'>budget deficit by $66.4 billion, the CBO said.
href='http://www.nytimes.com/reuters/washington/politics-congress-pensions.ht…'>Read
more.
In related news, a
Washington Post
editorial said that the House-passed pension reform bill
offers some remedies for the country’s ailing pension system, but
noted that it phases these reforms in slowly, and it has been especially
lenient toward airlines. Northwest and Delta are getting 17 years
in which to fund their pension promises, and they are allowed to assume
that the investment returns on their pension assets will be 8.85 percent
-- about a third higher than other companies are permitted to estimate.
Though American and Continental are being treated less generously, the
editorial criticized that they still get away with looser provisions
than companies in other industries. While Senate Majority Leader Bill
Frist hopes to pass the House bill without amendment, the House bill is
complex, and last-minute changes make it unclear whether it's likely to
increase the underfunding of pensions or decrease it.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/08/01/AR20060…'>Read
more.
Autos
GM,
name='2'>Delphi
on Wages, Plants
A union official said
General Motors Corp., Delphi Corp. and the United Auto Workers are at
odds over wages and proposed
face='Times New Roman' size='3'>Delphi
size='3'>plant closings in talks to reach a labor agreement before a
critical court hearing on Aug. 11, Bloomberg News reported today.
Failure to reach an agreement would raise the chances of a strike
at
size='3'>Delphi
which spun off the now-bankrupt auto-parts maker in 1999 and depends on
it as the main supplier of thousands of components such as steering
columns and air conditioners. A bankruptcy court is set to resume a
hearing next week on Delphi Chief Executive Officer Steve Miller's
request for permission to scrap existing contracts and impose lower
wages.
size='3'>Delphi
they will strike if their contracts are voided, potentially shutting
down production at GM.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aiu_hqI3w25A'>Read
more.
GM
Restates Loss and Sees Possible Delay in Deal for Finance
Arm
The General Motors Corp.
said Tuesday that its deal to sell a controlling interest in its
financing subsidiary could be delayed until next year and said it had
increased its second-quarter loss by $200 million, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. The restatement is the third time this year
that GM has adjusted its results after announcing them. Further, GM said
it might make further adjustments until it closes its agreement to sell
a stake in its finance arm, the General Motors Acceptance Corp. (GMAC).
GM said in a securities filing that it hoped to conclude the deal by the
end of 2006 as planned. But executives said it could take longer because
of a federal moratorium that was recently placed on the approval of some
banking transactions. Earlier this year, GM agreed to sell 51 percent of
GMAC to investors led by the equity group Cerberus Capital Management.
The sale was part of GM’s efforts to raise cash after a $10.6
billion loss last year.
href='http://www.nytimes.com/2006/08/02/automobiles/02GM.html?_r=1&oref=slogi…'>Read
more.
face='Times New Roman' size='3'>
name='4'>Delphi
size='3'> Shareholders Seek Financial
Advisor
Shareholders of bankrupt
Delphi Corp. want to hire a financial advisor for $175,000 a month to
assist with labor matters, the divesture of property and the evaluation
of the company’s relationship with its biggest customer, General
Motors Corp., Portfolio
Media reported yesterday. The
shareholders’ committee asked a judge for permission in a
filing Monday,
saying that a financial advisor’s expertise was “necessary
to effectively fulfill its fiduciary duties.” The committee said
the company’s debtors, U.S. Trustee and creditors’ committee
did not object to the hiring. It also said they have already interviewed
a number of financial advisory firms and reviewed the scope of services
and payment proposal with them.
name='5'>Northwest Flight Attendants Threaten to
Strike
Flight attendants for
Northwest Airlines Corp. announced yesterday that they have begun a
countdown to walk off the job, a day after rejecting a contract that
would have cut their pay by about 20 percent, the
face='Times New Roman' size='3'>Washington Post
size='3'>reported today. The employees, who are represented by the
Association of Flight Attendants, said they were gearing up to take
action as soon as 10 p.m. Aug. 15, the end of a 15-day warning period.
The union is not in negotiations with the airline, but an agreement that
avoids job actions could still be reached before the Aug. 15 deadline.
Northwest filed a motion in bankruptcy court to prevent the flight
attendants from striking or taking other job actions, said Roman
Blahoski, an airline spokesman. He said the airline thinks such strikes
would be illegal under the federal Railway Labor Act. Blahoski said the
airline was 'not discussing contingency plans' but would be willing to
sit down with the flight attendants. Any deal, he said, must include
$195 million in savings that the airline is seeking from the
attendants.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/08/01/AR20060…'>Read
more.
name='6'>Low Bankruptcy Filings Continue in
size='3'>
Ohio
There were 322 new cases
for the 21 northwest
w:st='on'>
size='3'>Ohio
covered, down 40 cases from the prior month and down 68 percent from
last July, when filers were rushing to beat the deadline for the new
federal law, the Toledo
Blade reported today. The amount of
information required of debtors to file is one reason monthly bankruptcy
filings have not climbed back as most experts predicted last autumn that
they would, said
face='Times New Roman' size='3'>Toledo
attorney
size='3'>Fredric Boyk. Through the first seven
months of this year, there have been 1,454 chapter 7 liquidation cases,
down 79 percent from last year, and 492 chapter 13 reorganization cases,
down 24 percent. There also have been seven chapter 11 business
filings.
href='http://www.toledoblade.com/apps/pbcs.dll/article?Date=20060802&Category…'>Read
more.
Judge
Approves Aphton Sale of Cancer Drug
A bankruptcy judge has
signed off on a deal that will allow biopharmaceutical company Aphton
Corp. to sell off its gastrointestinal cancer drug to Receptor BioLogix
Inc., Portfolio
Media reported yesterday. Judge
Christopher Sontchi
approved the $750,000 cash sale of the vaccine candidate,
Insegia, in the U.S. Bankruptcy Court for the District of Delaware on
Friday after the price increased 50 percent at auction. Aphton, which
develops cancer immunotherapies, slipped into chapter 11 in May after a
number of business deals fell apart. In addition to the $750,000,
Receptor also offered Aphton $50,000 in debtor-in-possession
financing.
name='8'>Treasury Secretary Concerned Americans Are Not Benefiting
from Economic Growth
Treasury Secretary Henry
M. Paulson Jr., delivering his first public remarks since taking office
last month, said yesterday that he recognized that the economy was not
benefiting all Americans, the
size='3'>New York Times reported today.
“Amid this country’s strong economic expansion, many
Americans simply aren’t feeling the benefits,” Paulson said
in a speech. “Many aren’t seeing significant increases in
their take-home pay. Their increases in wages are being eaten up by high
energy prices and rising health care costs, among others.” On the
crucial issue of currency values, however, Paulson promised to support a
strong dollar and hinted that he might try to become even more active in
dealing with tensions with
face='Times New Roman' size='3'>China
size='3'>over its currency, which many economists say is set
artificially low and is aimed at spurring exports to the
size='3'>United States
size='3'>.
href='http://www.nytimes.com/2006/08/02/business/02treasury.html?ref=business…'>Read
more.
SEC
Charges Former Daisytek Execs with Fraud
The U.S. Securities and
Exchange Commission filed a lawsuit Monday against five former
executives of bankrupt office and computer product distributor Daisytek
International Corp. for allegedly overstating earnings between 2000 and
2002, Portfolio
Media reported yesterday. Three of the
executives—former CEO James R. Powell, former controller Mark J.
Corjay and former executive vice president E. Suzanne Garrett—have
already settled with the SEC without admitting or denying the
allegations.
size='3'>According to the settlement, Powell cannot serve as an officer
or director of a public company for 10 years. He was also ordered to pay
disgorgement of $829,759 plus prejudgment interest of $148,595, though
these fines were waived based on Powell’s sworn financial
statement. Corjay cannot serve as an officer or director for five years
and cannot appear or practice before the SEC as an accountant for at
least five years. His $362,997 fine was reduced to $100,000 based on his
sworn financial statement. Garrett also received a five-year officer and
director ban, plus a fine of $147,500. The other two
defendants—former chief financial officer Ralph Mitchell and
former executive vice president Michael D. Scannell—did not settle
with the agency and will head for trial.
International
name='10'>Yukos Ordered to Liquidate after Bankruptcy
Decision
Yukos oil company,
once
face='Times New Roman'
size='3'>Russia
size='3'>’s largest company, was declared bankrupt by Russian
judges, who ordered its assets to be liquidated,
the New York
Times reported today.
size='3'>The panel of three judges assigned Yukos assets in
size='3'>Russia
size='3'>to a court-appointed manager who has a year to auction them to
pay creditors, including the tax ministry and Rosneft, the state oil
company. The ruling ends a three-year effort to salvage Yukos, which was
saddled with huge tax bills after its founder, Mikhail B. Khodorkovsky,
supported opposition political parties. The
remaining assets of Yukos are expected to be divided up by Gazprom and
Rosneft, the Russian government’s two largest energy operators.
Rosneft has been hovering over Yukos for months already as the lead
creditor in the bankruptcy process. The judges dismissed arguments by
the Yukos lawyer Drew P. Holiner that the company could recover as the
value of its oil fields, refineries and filling stations rose along with
high world oil prices.
href='http://www.nytimes.com/2006/08/02/business/worldbusiness/02yukos.html?p…'>Read
more.
name='11'>Lloyds Blames British Bankruptcy Laws for Credit
Binge
Lloyds TSB has blamed
changes to British bankruptcy laws for much of the 20 percent
increase reported in the bank's bad debt charges, the
face='Times New Roman' size='3'>London Telegraph
size='3'>reported today. Chief executive Eric Daniels said: 'The
deterioration in the unsecured consumer lending environment,
particularly reflecting the changes to personal bankruptcy laws, has led
to an increase in our impairment charge.' Daniels' comments come amid
rising concerns that changes to the bankruptcy laws may have led some
customers to become more cavalier about debts and repayments. Government
figures published in May showed that individual voluntary agreements
(IVAs), an alternative to bankruptcy that allows people to reorganize
their debts and pay a set amount of money each month in return for
creditors freezing interest payments, had soared by 142
percent over the previous year. Impairment charges for bad loans at
Lloyds were £800 million for the six months to June. In its
retail banking arm, the charges were £632 million, up 16 percent
over the same period last year.
href='http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/08/02/uloyd…'>Read
more.
name='12'>Eurotunnel to Meet Creditors Before
Ruling
Heavily indebted
cross-Channel tunnel operator Eurotunnel will meet with its creditors
today ahead of a crucial commercial court decision on its request to get
creditor protection, Reuters reported today. A company spokeswoman said
the meeting in
face='Times New Roman' size='3'>Paris
would not necessarily result in a last-minute debt
restructuring deal. The
w:st='on'>
size='3'>Paris
court is set to rule on a request by Eurotunnel to be put under creditor
protection, since it was unable to reach a deal over restructuring
£6.18 billion ($11.53 billion) of debt. Last week, the court
decided to delay its decision in order to give more time for talks among
the various groups of creditors of the Channel Tunnel
operator. The French
court has three options to consider: It could delay a decision again,
dismiss the case or begin a “safeguard procedure,'' which is
similar to U.S. chapter 11 bankruptcy.
href='http://www.nytimes.com/reuters/business/business-transport-eurotunnel.h…'>Read
more.
href='http://www.nytimes.com/reuters/business/business-transport-eurotunnel.h…'>