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September 18, 2002
Senate Will Pass on Bankruptcy Reform Unless House Resolves
Dispute
The Senate will not take up bankruptcy reform legislation until the
House passes it, a spokeswoman for Senate Majority Leader Tom Daschle
(D-S.D.) affirmed Tuesday, CongressDaily reported. The House has
been hung up in voting on the measure because of a split in the
Republican Conference over the bill's impact on abortion clinic
protesters. Daschle supports the bankruptcy conference report, which a
majority of House and Senate conferees agreed to, and similar measures
have passed easily in the Senate before. Senate action could help
pressure the House into action. However, Daschle's spokeswoman noted
that calendar space is at a premium and said Senate leaders do not want
to spend time on the bankruptcy measure, only to find that the House
cannot bring it to a successful conclusion. The House also has approved
similar bankruptcy measures by wide margins. However, the chamber at
large had not been previously confronted with language regarding the
treatment in bankruptcy of individuals fined because of protest
activities, added by this year's conferees.
House Majority Leader Dick Armey (R-Texas) yesterday criticized House
Democrats for complicating House consideration of FY03 spending bills
and the impasse over a bankruptcy reform conference report,
CongressDaily reported. Armey said his commitment to bankruptcy
reform remains 'unqualified,' but contended that abortion language added
by Sen. Charles Schumer (D-N.Y.) in conference makes a House vote
problematic. 'To me, you have a sensational juxtaposition of two morally
compelling issues,' Armey said.
Outlook Remains Unclear for Rent-To-Own Bill in Senate
A heavily lobbied, controversial bill to impose federal rules on the
so-called 'rent-to-own' industry and override state laws is heading for
an uncertain future if it reaches the Senate, CongressDaily
reported. Although the bill cleared the House Judiciary Committee Sept.
10 by a narrow, 14-12 margin, and earlier passed 29-9 in the House
Financial Services Committee, it has encountered stiff opposition from
Judiciary Chairman James Sensenbrenner (R-Wis.), as well as Democrats
and consumer groups. Nevertheless, congressional sources said they
expect the legislation, which strongly backed by House Majority Leader
Dick Armey (R-Texas), to win House approval Wednesday, following what
opponents have described as a $4 million campaign blitz by the industry.
'I believe regulation of the rent-to-own industry is a state matter, and
H.R. 1701 is a misguided attempt to pre-empt the existing law of
virtually every state,' said Sensenbrenner. Bill supporters said it
would create a national set of protections for consumers instead of
different rules in each state, but critics say the measure falls far
short.
U.S. Industrial Production Falls in August
Industrial production fell by 0.3 percent in August, the first decline
in eight months, CongressDaily reported. The drop was the first
decline since December, when the nation's economy was still trying to
claw its way out of a recession that began in March 2001, the newswire
reported. The weak performance in August came after industrial activity
rose by a modest 0.4 percent in July, according to revised figures. Much
of the weakness in the overall industrial sector came from a sharp 2.5
percent drop in output at gas and electric utilities, despite relatively
high temperatures in August.
Objections Made in Adelphia's Bid to Wind Down CLECs
Adelphia Communications Corp.'s bid for court approval to wind down 14
of its 17 competitive local exchange carrier (CLEC) markets and sell
nearly all the related assets has been met with objections, according to
papers filed with the U.S. Bankruptcy Court in Manhattan, Dow Jones
reported. Former telecommunications unit Adelphia Business Solutions
Inc. said the amount it will receive for assisting with the wind-down
should be agreed upon in advance. The court should also make it clear
that agreements related to the markets are the responsibility of
Adelphia Communications, not Adelphia Business.
Adelphia Business -- which, like Adelphia Communications, is in chapter
11 -- said it also appears that many of the agreements related to the 14
CLECs weren't properly assigned and transferred to Adelphia
Communications under the sale deal. A hearing on Adelphia
Communications' request to wind down the CLECs is scheduled to be
considered Thursday by Judge Robert E. Gerber.
Trustee Pulls Motion to Change Devon Mobile Case to Chapter
7
The U.S. Trustee's office on Tuesday withdrew a motion to convert Devon
Mobile Communications L.P.'s chapter 11 bankruptcy case to a chapter 7
case, after the company pledged to obtain sufficient financing and file
a reorganization plan by the end of the year, Dow Jones reported. The
motion was withdrawn as Devon Mobile nears a deal to sell 75
communications towers. Devon Mobile is also close to winning final
approval of a $3.2 million debtor-in-possession loan with Kennedy
Funding Inc., a pre-petition lender. The company will submit a revised
order to Chief Judge Peter J. Walsh of the U.S. Bankruptcy Court
in Wilmington on Wednesday, the newswire reported. The revised order
will contain language changes at the request of its committee of
unsecured creditors and other parties.
Devon Mobile also agreed to file a reorganization plan and disclosure
statement prior to the expiration of the 120-day period. If the debtor
fails to meet either criteria, the U.S. Trustee's office would reinstate
the motion to convert and the bankruptcy court will consider the motion
on an expedited basis. Devon Mobile filed for chapter 11 bankruptcy
protection on Monday, listing total assets of about $142.7 million and
total liabilities of roughly $64.8 million as of June 30.
SkyWest Shares Down on Fears of UAL Bankruptcy
SkyWest Inc. shares fell as much as 10 percent Tuesday, pressured by
heavy overnight volume and fears that UAL Corp.'s United Airlines unit
is headed for chapter 11 bankruptcy protection, Dow Jones reported.
SkyWest, through its wholly owned subsidiary, SkyWest Airlines, operates
regional jets under the United Airlines banner through a code-sharing
pact. Investors fear that SkyWest's profit margins would be hurt if
United files for bankruptcy. UAL is one of several carriers struggling
in the wake of last year's terror attacks, which dampened passenger
traffic. The company in recent weeks has put forth a restructuring plan
that calls for labor concessions and a loan guarantee from the federal
government.
Standard MEMS Files for Chapter 11 Bankruptcy Protection
Standard MEMS Inc., which makes semiconductor-related products, filed
for chapter 11 bankruptcy protection Monday with the U.S. Bankruptcy
Court in Wilmington, Del., according to Dow Jones. The Burlington,
Mass.-based company estimated its total assets and debts at $10 million
to $50 million each. The chapter 11 petition didn't include a reason for
the filing, but acknowledged that the board authorized the company to
file after reviewing the market for Standard MEMS's operations as well
as its liabilities. Standard MEMS said in the chapter 11 filing that it
has 100 to 199 creditors and estimated that funds will be available for
distribution to unsecured creditors.
The company listed MEMC Electronic Materials Inc., which makes
polysilicon and silicon wafers used in the production of semiconductors,
as its largest unsecured creditor, holding a claim of roughly $1.1
million. Innovion was cited as the second-largest unsecured creditor,
with a claim of $861,000.
Financial Troubles Deepen for Xcel Energy Unit NRG
Xcel Energy Corp. power generation and trading unit NRG Energy saw its
precarious financial position erode further Monday, as it missed
principal and interest payments and saw its already junk credit ratings
downgraded further, Dow Jones reported. Xcel said in a filing with the
Securities and Exchange Commission on Friday that NRG has enough cash to
cover its operating costs through Oct. 31, provided it can secure
further extension of the collateral deadline, sell some assets and defer
some costs.
In a release late Monday, NRG President and Chief Operating Officer
Richard Kelly said this week's defaults won't force the unit into
bankruptcy, an option the company has sought to avoid. He also said the
unit is in talks with banks and bondholders and hopes to secure another
extension of the collateral deadline. S&P lowered all other NRG
issues to double-C from triple-C to reflect uncertainty about the unit's
ability to restructure its operations outside of bankruptcy.
Birmingham Steel Seeks Approval of Ameristeel Settlement
Birmingham Steel Corp. is asking a bankruptcy court to approve a
settlement with Ameristeel Corp. that would bring $1.5 million into the
debtor's chapter 11 estate, Dow Jones reported.The funds come from a $3
million escrow agreement that was entered into as part of the sale of
Birmingham Steel's Cartersville, Ga., facility to Ameristeel last year.
Ameristeel will get the remaining $1.5 million.
Last week, Birmingham Steel won confirmation of a reorganization plan
that contemplates the sale of substantially all of its assets to Nucor
Corp. in a deal valued at $615 million. Roughly 97 percent of the
debtor's creditors, which hold about 99 percent of the claims filed
against the estate, voted in favor of confirmation, attorneys for
Birmingham Steel said. A hearing to consider approval of the proposed
settlement with Ameristeel is scheduled on Oct. 10 at 10:30 a.m. EDT.
Objections must be filed by Oct. 3. at 4 p.m. EDT.
SpectraSite Falls 47 Percent on Restructuring News
Shares of SpectraSite Holdings Inc. fell as much as 47 percent on
Tuesday after the holding company for a wireless tower operator said it
has begun discussions to restructure its publicly held debt, Reuters
reported. The stock fell as low as 9 cents before retracing some of its
losses at about 12 cents, off 5 cents or 26.6 percent on Nasdaq midday
trading.
Wireless tower companies have been burdened by their debt loads as
business slowed down after wireless telephone companies slashed capital
spending. Earlier this year, Pinnacle Holdings Inc. filed for chapter 11
bankruptcy. Analysts said investors were concerned that SpectraSite may
also end up declaring bankruptcy protection.
Chile's Edelnor Files Prepackaged Chapter 11 Bankruptcy in New
York
Chilean electricity generator Empresa Electrica Del Norte Grande SA, or
Edelnor, filed a prepackaged chapter 11 bankruptcy case on Tuesday with
the U.S. Bankruptcy Court in Manhattan for some of its U.S. assets, Dow
Jones reported. Edelnor keeps principal executive offices in Santiago,
Chile, and for the past two years has maintained accounts in New York
with minimum total balances of about $1 million to $3 million. With the
exception of those New York accounts, all of Edelnor's assets are in
Chile. The bankruptcy court assigned Edelnor case number 02-14530, and
Judge Allan L. Gropper is presiding over the case. The company is
represented by Thomas J. Moloney of Cleary Gottlieb Steen &
Hamilton.
Kmart To Sell Internet Access Operations to United Online
Unit
Kmart Corp. and its BlueLight.com LLC unit have agreed to sell the
assets related to their dial-up Internet access and e-mail services
business to NetBrands Inc., a wholly owned subsidiary of United Online
Inc., according to a notice filed with the court handling Kmart's
chapter 11 bankruptcy case, Dow Jones reported. Financial terms of the
sale-which will be subject to higher offers during a competitive
auction-weren't disclosed, the newswire reported. The assets are part of
the companies' BlueLight Unlimited Internet Service, which is an $8.95 a
month online Internet service that provides users with e-mail accounts
and access to the Internet.
BlueLight will take bids for the purchase of the BlueLight ISP from
all interested parties between now and Oct. 4. An auction is scheduled
for Oct. 7. The winning bid is expected to be presented to the U.S.
Bankruptcy Court in Chicago at a hearing on Oct. 30, Dow Jones reported.
Kmart filed for chapter 11 protection Jan. 22.
Cold Metal/DIP Approval: Filed for Chapter 11 August 16
Cold Metal Products Inc received final approval from the U.S. Bankuptcy
Court for up to $48 million in debtor-in-possession financing, Dow Jones
reported. In a press release Tuesday, Cold Metal said it also received
court approval to continue wages and benefits for active employees. The
steel producer filed for bankruptcy protection of its U.S. assets on
August 16. Upon its filing, the company said the $48 million in
financing should provide sufficient liquidity for working capital
requirements.
Global Crossing Files Its Plan to Reorganize
Global Crossing Ltd. filed a reorganization plan on Monday that its new
owners, an investor group from Hong Kong and Singapore, hope will allow
it to become profitable after emerging from bankruptcy by the beginning
of next year, the New York Times reported. Hutchison Whampoa of
Hong Kong and Singapore Technologies Telemedia agreed last month to pay
$250 million for a 61.5 percent stake in Global Crossing, operator of a
fiber optic communications network that operates in 27 countries.
'Global Crossing expects to emerge from Chapter 11 in early 2003,
subject to satisfying various contractual closing conditions, and
confirmation of its plan of reorganization by the bankruptcy court,'
Janis Burenga, a spokeswoman for Global Crossing, said in a statement
yesterday. The plan filed with the United States Bankruptcy Court in New
York is part of a restructuring of Global Crossing's debts that its
creditors and new owners hope will make it profitable as early as next
year, according to court papers.
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