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April 1, 2010
Lyondell, U.S. Reach Deal on Environmental
Claims
Lyondell Chemical Co. has reached a settlement worth about $250
million with the United States and various state governments to resolve
a slew of environmental claims and liabilities, and is seeking court
approval of the deal, Reuters reported yesterday. Lyondell plans to fund
two trusts to oversee the cleanup of hazardous waste sites in
Pennsylvania, California and other states, as well as pay governmental
agencies for administrative claims, according to court documents. The
settlement, if approved will resolve a majority of environmental claims
stemming primarily from the company's purchase of Millennium Chemicals
Inc in 2004. An additional $1.18 billion in claims against Lyondell,
which filed for bankruptcy in January 2009, will be allowed, but will
likely be paid at a 'substantially reduced rate' reflecting the rate
paid to other general unsecured creditors under bankruptcy law and
Lyondell's plan of reorganization, said the U.S. Attorney for the
Southern District of New York, in a statement. Government agencies had
asserted various environmental claims and liabilities totaling about
$5.5 billion.
href='http://www.reuters.com/article/idUSN3119642320100331'>Read
more.
Spansion Seeks More Time on Exit
Loan
With a court decision regarding the confirmation of its plan taking
longer than originally expected, computer flash memory maker Spansion
Inc. now seeks to amend its exit financing package to compensate, the
Deal Pipeline reported yesterday. In a motion filed on Monday in
the U.S. Bankruptcy Court for the District of Delaware, the Sunnyvale,
Calif.-based company asked Chief Judge Kevin Carey for approval
to alter the terms of its $559 million exit financing package from
lenders led by Barclays Bank plc and Morgan Stanley Senior Funding Inc.
A hearing to consider the request has not been scheduled.
title='Read more'
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005408531'>Read
more. (Subscription required.)
Federal Reserve Ends Purchasing Program for
Mortgage Securities
The Federal Reserve?s single largest intervention to prop up the
American economy, its $1.25 trillion program to buy mortgage-backed
securities, came to a long-anticipated end yesterday, the New York
Times reported today. The program was initially for $500 billion.
The purchases began in January 2009, and in March, the Fed raised the
goal to $1.25 trillion. The purchases were to end by Dec. 31, but in
September, the Fed said the purchases would taper off more slowly,
ending on March 31. The purchases caused rates for 30-year mortgages,
which exceeded 6 percent in late 2008, to fall to below 5 percent by
March 2009. They are hovering slightly above 5 percent today.
id='cggk' title='Read more.'
href='http://www.nytimes.com/2010/04/01/business/01fed.html?ref=business&page…'>Read
more.
Administration Seeks to Change Pay
Incentives at Major Firms
As firms begin to disclose last year's bonuses ahead of annual
shareholder meetings, it is becoming clear that companies across a wide
range of industries are paying executives in ways that government
officials worry will not discourage the kind of excessive short-term
risk-taking that led to the financial crisis, the Washington Post
reported today. The Treasury Department said that it is not looking to
limit the total pay executives receive. Kenneth R. Feinberg, President
Obama's special master for compensation, wants to change pay incentives,
giving executives a greater stake in the long-term performance of their
firms.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/03/31/AR2010033104402_pf.html'>Read
more.
Lehman Seeks to Buy Notes For Help in
Derivatives Fight
Lehman Brothers Holdings Inc. is seeking approval from a federal
judge to buy notes issued by structured finance vehicles, a move the
investment bank says will benefit creditors and give it leverage in its
legal fight with investors in complex derivatives deals, Dow Jones
Daily Bankruptcy Review reported today. The investment bank has
been wrangling with derivatives counterparties in courts in the U.S. and
U.K. for months over the rights to the underlying assets backing the
deals. Now it wants to pursue an 'alternative method' - that is, buying
the notes issued by the SPVs - because their value, in many cases, is
less than the value of the collateral. By purchasing the notes at a
discount, then selling off the collateral and redeeming the notes,
Lehman says it can realize a net gain on the investments. 'They're
spending money to make money,' said John Penn, an attorney at
Haynes and Boone in Fort Worth, Texas.
SEC May require More Details of Wrongdoing
to be Disclosed in Settlements
The Securities and Exchange Commission might end its long-standing
practice of letting companies and individuals settle charges of
wrongdoing without publicizing the detailed findings of its
investigations, the Washington Post reported today. Under
existing policy, companies and executives that settle lawsuits filed by
the SEC typically pay a fine and agree to other sanctions, but they
neither have to admit wrongdoing nor undergo a trial in which the
details of their alleged misconduct would be unveiled. However, Robert
Khuzami, the SEC's enforcement director, said that the agency is
reconsidering the policy. 'Typically our practice has been not to file
in-depth factual findings of the investigation,' Khuzami said. 'We're
taking a look at the practice and deciding whether it makes sense to
provide a more fulsome record' in an effort to be more transparent.
id='qcdz' title='Read more.'
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/03/31/AR20100…'>Read
more.
New York Fed Opens the Books on AIG, Bear
Stearns Toxic Assets
The Federal Reserve Bank of New York lifted a veil of secrecy on the
troubled mortgage assets it purchased as part of the 2008 rescues of
Bear Stearns Cos. and American International Group Inc., the Wall
Street Journal reported today. The data show the government is now
in the same situation as many U.S. banks: dealing with a portfolio of
loans and property that have lost their value, and which borrowers are
struggling to pay off. The New York Fed was earlier reluctant to release
detailed information about the mortgage portfolios because officials
felt identifying individual loans and securities could make it harder
for the assets to be sold for competitive prices in the future.
id='f7nx' title='Read more.'
href='http://online.wsj.com/article/SB100014240527023033383045751564430916480…'>Read
more. (Subscription required.)
General Growth Bidders Seek Stalking-Horse
Status
Brookfield Asset Management Inc. and two major creditors of General
Growth Properties Inc. are expected to disclose in court filings that
their $6.5 billion offer to recapitalize the bankrupt mall owner will
remain on the table until Dec. 31, the Wall Street Journal
reported today. The offer will be available to General Growth through
year end if the Brookfield-led team is granted stalking-horse status by
a bankruptcy judge at an April 28 hearing. The offer is likely to face
competition from rival mall owner Simon Property Group Inc., which has
indicated it will consider sweetening its earlier, $10 billion bid to
acquire all of General Growth once it has examined the details of the
Brookfield proposal.
href='http://online.wsj.com/article/SB10001424052702304252704575156583170285358.html?mod=WSJ_business_whatsNews#printMode'>Read
more. (Subscription required.)
Carl Icahn's Unwinds Blockbuster Stake As
Debt Payment Looms
Carl Icahn has finally given up on Blockbuster Inc., just days
before the company faces a major debt payment, Dow Jones Daily
Bankruptcy Review reported today. On Friday, Monday and Tuesday,
according to federal filings, Icahn sold almost all of his Class A
common stock at the average price of 26 cents apiece. His sales brought
in just over $3.4 million, almost 97 percent less than the nearly $107
million it cost to acquire the 13.2 million shares over the years, and
he now owns an 71,749 Class A shares. Blockbuster today must make a $43
million payment on its senior secured notes, which will further crimp
its liquidity and eat a chunk of the $188.7 million in cash Blockbuster
had in early January. It said recently that it might have to file for
bankruptcy protection, citing a large debt load that it needs to
restructure for the second time in under a year.
ABI's Bankruptcy Code Online Reflects New
Dollar Adjustments
ABI's Bankruptcy Code Web site has been updated to reflect the
automatic adjustments to take effect on April 1 to the dollar amounts
stated in various provisions of the Bankruptcy Code. The amended dollar
amounts will affect, among other items, the eligibility of a debtor to
file under chapters 12 and 13 of the Bankruptcy Code, certain maximum
values of property that a debtor may claim as exempt, the maximum amount
of certain claims entitled to priority, the calculation of the ?means
test? for chapter 7 debtors, the duration of a chapter 13 plan, the
definition of a small business debtor, the minimum aggregate value of
claims needed to commence an involuntary bankruptcy, the value of
?luxury goods and services? deemed to be nondischargeable, and where the
trustee may commence certain proceedings to recover a money judgment or
property. For more information on the dollar adjustments, please
id='th0.' title='click here.'
href='http://edocket.access.gpo.gov/2010/pdf/2010-3807.pdf'>click
here.
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