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March 28, 2006
name='1'>Curative Health Files Chapter 11 with $255 Million in
Debts
New Hampshire-based
health care provider Curative Health Services has filed for chapter 11
bankruptcy protection, listing in its petition $255.6 million in debts
and only $155 million in assets,
size='3'>Portfolio Media reported yesterday.
The company has been financially struggling since last year, and the
option of chapter 11 had been extensively discussed. In December,
Curative reached a restructuring agreement with its bondholders that
would help strengthen its balance sheet. Under the agreement, an ad hoc
committee representing 80 percent of its 10.75 percent senior notes due
in 2011 agreed to exchange $185 million in senior debt for $27.75
million in cash and all of the equity in the reorganized company. All
current equity is likely to be canceled upon Curative’s emergence
from chapter 11.The
health services provider has also already secured debtor-in-possession
financing from General Electric Capital Corp. as part of a 2004
agreement between the two companies. The amount of the loan has yet to
be released.
Justice
Department Says It
Found Problems in Enron Bankruptcy Billing
The turnaround specialist
who led the Enron Corporation through its bankruptcy engaged in
unacceptable billing practices and has agreed to cut in half the $25
million he has been seeking as a 'success fee,' the Justice Department
said, according to the Associated Press today. The department's Trustee
Program said it uncovered the billing problems after the turnaround
specialist, Stephen Forbes Cooper L.L.C., and its principal,
Stephen Cooper , asked the Federal Bankruptcy Court
in
size='3'>for $25 million as the fee for guiding Enron through its
chapter 11 bankruptcy case. The firm denied any billing irregularities,
but agreed to reduce its request to $12.5 million after the trustee's
office shared the results of its investigation with the bankruptcy
court, according to papers filed with the bankruptcy court. Judge
Arthur Gonzalez of the bankruptcy court will determine
the size of the success fee.
href='http://www.nytimes.com/2006/03/28/business/28trustee.html?pagewanted=pr…'>Read
more.
ABI
and U.S. Trustee Program Mourn the Death of Trustee Mary E.
May
ABI and the U.S. Trustee
Program mourn the death of U.S. Trustee Mary E. May of
Wichita, Kan. 'It is with profound sadness that I report the passing of
U.S. Trustee Mary May after a heroic battle against leukemia,' Cliff
White, Acting Director of the Executive Office for U.S. Trustees, stated
yesterday. Among May's many notable achievements were her contributions
to making the new bankruptcy reform law work effectively, revitalizing
the criminal fraud prosecution program in her region, and achieving
other goals to improve the bankruptcy system. In addition, she willingly
shared her extensive bankruptcy knowledge and experience in her many
presentations and training sessions. May served as the U.S. Trustee for
size='3'>Kansas
face='Times New Roman' size='3'>Oklahoma
size='3'>New Mexico
since her appointment in September 2002. Before joining the U.S. Trustee
Program, she was a partner with the
w:st='on'>
size='3'>Wichita
Coulson & Kitch, L.L.C., and she served as a chapter 7 panel trustee
in the District of Kansas. May served on the Kansas Board for Discipline
of Attorneys from 1996 to 2002 and was a long-time member of the Wichita
Bar Association's Ethics Committee.
name='4'>Personal Bankruptcies in
w:st='on'>
size='3'>Colorado
size='3'>Plunge
Colorado personal
bankruptcy filings dropped by 81 percent in the first quarter of this
year from the same period in 2005, after skyrocketing in the days
leading up to big changes in the law last October, the
face='Times New Roman' size='3'>Rocky Mountain News
size='3'>reported today. Filings slowed from a flood to a trickle after
a new law took effect last year, dropping from almost 15,000 in October
to 129 the following month. Since then, they've begun to increase a bit
each month, hitting almost 500 this month with a week left to go. But
they're still nowhere near the thousands of monthly filings that
constituted the norm in recent years. 'It
dropped off extremely until about the first of February. Since then,
it's been steadily growing,' said
w:st='on'>
size='3'>Englewood
size='3'>bankruptcy lawyer George Carlson
. The new law and the filings it spurred
helped
face='Times New Roman'
size='3'>Colorado
personal bankruptcies hit 43,041 last year, up from 27,890 the year
before.
href='http://www.rockymountainnews.com/drmn/other_business/article/0,2777,DRM…'>Read
more.
name='5'>Bankruptcy Court Endorses Hedge Fund’s DIP
Plan
PlusFunds Group Inc., the
bankrupt hedge fund struggling to get back on sound financial footing,
got some good news as a judge gave the go-ahead to a $407,000
debtor-in-possession (DIP) loan as the company attempts to sell millions
of dollars in assets,
size='3'>Portfolio Media reported yesterday.
Last Thursday, U.S. Bankruptcy Judge James Peck paved
the way for the final loan to go through with the recently-formed DIP
Funding Group LLC, an entity that is wholly-owned by PlusFunds
shareholder and director Mark Kavanaugh. The hedge fund had originally
sought a $1 million DIP, but a $600,000 payable resulting from federal
tax returns allowed for the amount of the loan to be reduced. The DIP
was set at a 5.5 percent interest per annum. The loan approval
comes as the bankruptcy court recently approved of San Francisco-based
private equity firm FTVentures’ bid to acquire PlusFunds for $2
million in cash and $3 million in stock. Bankrupt creditor Refco Capital LLC and the
creditors’ committee of bankrupt Refco Inc. withdrew their
previous objections after reaching agreements with PlusFunds.
Airlines
name='6'>Trustee Asks Judge to Hold Attorney Fees in Delta
Case
Attorneys, accountants
and advisers in the Delta Airlines bankruptcy won’t be receiving a
paycheck anytime soon if the U.S. Trustee involved in the proceedings
has her way, according to
size='3'>Portfolio Media yesterday. U.S.
Trustee Dierdre
Martini has asked the judge in the case to
hold back part of the $41.2 million in payments for work on the early
stages of the case until some professionals provide more information
about their fees. The trustee said she intended to question several
firms involved in the case, including general counsel Davis Polk &
Wardwell, special aircraft attorneys Debevoise & Plimpton and
financial advisers Babcock & Brown, about the specifics of some of
their fees. Martini also requested a “significant holdback”
until Delta resolved its litigation with the pilots’ union,
telling the judge that the outcome of the contract dispute would have a
significant impact on the extent of the carrier’s solvency. 'The
debtors are engaged in litigation with the pilots' union,” she
said in a court filing. 'If the debtors do not prevail, the debtors have
indicated that they will not have sufficient funds to reorganize under
their business model. Because the outcome of these cases are in doubt,
the U.S. Trustee believes a holdback is
warranted.'
w:st='on'>
name='7'>Northwest
w:st='on'>
size='3'> Sues
w:st='on'>
size='3'>Airport
face='Times New Roman' size='3'> Commission to Rid Itself of
Debt
Northwest Airlines has sued the
Metropolitan Airports Commission in hopes of voiding a $130 million
debt, the Associated Press reported today. The lawsuit, filed Thursday
in bankruptcy court in New York, claims that a special facility
financing deal for space Northwest uses at Minneapolis-St. Paul
International Airport is really a loan, not a lease.
face='Times New Roman'>Northwest is
w:st='on'>
size='3'>Michigan
air carrier with a hub at
w:st='on'>
size='3'>Detroit
face='Times New Roman' size='3'>Metropolitan
size='3'>Airport
size='3'>. The lawsuit says that
bondholders, as unsecured creditors, aren't owed anything except what
they might get after a reorganization plan or chapter 7 liquidation. The
lawsuit also names a trustee for bondholders, Manufacturers and Traders
Trust Co., as a defendant.
href='http://www.usatoday.com/travel/flights/2006-03-28-northwest-lawsuit_x.h…'>Read
more.
name='8'>Appaloosa Proves to Be an Emerging Bankruptcy
Force
In a winter that has been
dominated by big bankruptcies by auto suppliers Delphi Corp. and Dana
Corp., one name that seems to keep popping up as chapter 11
face='Times New Roman'>proceedings begin to unfold is
Appaloosa Management LLC,
size='3'>Portfolio Media reported yesterday.
Whether fighting for an equity committee in the
w:st='on'>
size='3'>Delphi
bankrupt cable provider Adelphia Communications Corp. of costing it
millions, the hedge fund is both actively and aggressively pursuing its
interests in bankrupt companies. David Tepper, a former top executive at
Goldman Sachs, runs the $3 billion
w:st='on'>
Jersey
which invests in distressed companies. Previously involved in the
bankruptcies of such giants as WorldCom, Appaloosa paid $17.4 million to
acquire 52 million shares of
face='Times New Roman' size='3'>Delphi
size='3'>, representing a 9.3 percent
size='3'> stake in the bankrupt auto maker.
The hedge fund also holds a 14.8 percent equity stake in newly-bankrupt
Dana Corp.
Autos
name='9'>GM's Jobs Bank Looms as Major Obstacle on Road to
Survival
General Motors’
Jobs Bank, which pays idled workers a full salary and benefits, is one
critical burden that GM has to carry as it embarks on one of the biggest
challenges of its corporate survival, the New York Times
reported today. If GM is not successful in convincing enough workers to
take recently offered buyouts, the company will be stuck with excess
workers who will swell the ranks of the Jobs Bank.
size='3'>As much as GM's buyouts are a way for the company to meet a
goal of cutting 30,000 factory hobs by 2008, they are also a sign that
the company wants to reduce as much as possible the size of its Jobs
Bank, which has grown to 7,500 workers. For workers who remain in the
Jobs Bank, their future is uncertain. As part of the buyout deal, GM and
the union agreed to begin discussions no later than Dec. 31 on how to
handle surplus workers.
href='http://www.nytimes.com/2006/03/28/business/28jobsbank.html?_r=1&oref=sl…'>Read
more.
name='10'>Commentary: Flawed GM-UAW Labor Contract Needs Dose of
Reality
From a
shareholder’s point of view, General Motors Corp. is party to one
of the worst labor contracts as witnessed by GM’s agreement to pay
as many as 129,000 union workers to quit last week, according to a
Bloomberg News op-ed yesterday. GM estimates that buyouts for union
workers, along with those at former parts subsidiary Delphi Corp., may
cost $5.5 billion to $12 billion. The final sum will be particularly
onerous for GM as the automaker contends with a junk credit rating and
pinched investment budget for developing new vehicles. The buyout offer
is designed to remove from payrolls as many GM and
w:st='on'>
size='3'>Delphi
group earning high and uncompetitive wages. Depending on how many
retire, some
size='3'>Delphi
GM plants; some laid-off workers might return to the job.
Incredibly, GM has secured no reciprocal concessions, at
least so far, from the United Auto Workers union that would let GM pay a
lower, competitive wage to new hires and to those who decline the
buyout.
href='http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_levin…'>Read
more.
face='Times New Roman' size='3'>
name='11'>Delphi
size='3'> Makes Offer to Unions as Deadline
Approaches
With a Friday deadline to
reach a deal with its labor unions approaching, the auto parts
supplier
size='3'>Delphi
its factory workers $50,000 in exchange for a 40 percent reduction in
pay, according to union officials who have been briefed on the plan,
the New York
Times reported today. The plan also calls for
General Motors, which spun off
face='Times New Roman' size='3'>Delphi
size='3'>in 1999, to subsidize part of the plan's cost, but it could not
be determined how much GM would contribute. A GM executive said the
carmaker was negotiating with
face='Times New Roman' size='3'>Delphi
size='3'>whether GM would help subsidize the plan. The reported offer
came a few days after
size='3'>Delphi
Automobile Workers reached an agreement on buyout offers to 13,000 UAW
members out of 24,000 at the parts maker.
size='3'>Under the newest plan,
face='Times New Roman' size='3'>Delphi
size='3'>, which has asked workers to accept lower wages, has proposed
lowering pay for factory workers initially by $5.50 an hour, to $22 an
hour, in early July. The rates would later drop to $16.50 an hour in
September 2007, union officials said. The UAW leadership will meet
Tuesday with local union leaders from across the country to brief them
on the plan's details.
href='http://www.nytimes.com/2006/03/28/business/28delphi.html?pagewanted=pri…'>Read
more.
International
name='12'>Study Reveals Financial Crisis for British Between Ages
18-40
An official British
government study into the country’s
size='3'> personal finances reveals a lost
generation of 18- to 40-year-olds unable to cope with debts and soaring
house prices, with alarmingly low levels of savings and little hope of
building a decent pension, the London Guardian reported today. The
study, conducted by the Financial Services Authority (FSA) and
size='3'>Bristol
face='Times New Roman'
size='3'>University
paints a picture of a generational divide fuelled by higher education
costs and the collapse of company pension schemes - with 42 percent of
adults now with no pension and 70 percent with little savings. The FSA
will call today for a new national strategy to improve
w:st='on'>
size='3'>Britain
size='3'>'s financial capability, including workplace-based financial
seminars targeted at 4 million employees; making personal finance more
prominent in the national curriculum from 2008; and 'money doctor' packs
which will be sent to 1.5 million new and prospective parents each
year.
href='http://money.guardian.co.uk/print/0,,329444437-110144,00.html'>Read
more.
w:st='on'>
name='13'>Bolivia
face='Times New Roman' size='3'> Airline on Verge of
Bankruptcy
Bolivian airline Lloyd
Aereo Boliviano (LAB) is 'on the verge of bankruptcy,' its president
said, as a worsening financial and labor crisis left the airline
threatening Monday to cancel national and international flights again,
the Associated Press reported yesterday. In a television announcement
Sunday night, Ernesto Asbun also called on workers to halt recent
strikes, warning that if the situation did not reverse itself quickly,
LAB -- which has some 1,500 employees -- would be forced to cease
flights to
size='3'>Madrid
w:st='on'>Miami
w:st='on'>
size='3'>Washington
The Bolivian government intervened in the management of LAB several
weeks ago, ending that strike. But new walkouts resumed last week after
the
face='Times New Roman' size='3'>Constitutional
Court
intervention illegal and Asbun returned to the helm.
face='Times New Roman' size='3'>Executives and worker representatives
tried Monday to negotiate an end to the conflict. But many workers
accuse Asbun of trying to bring LAB into bankruptcy as a prelude to
forming a new company, and have said they would not return as long as he
heads up the airline.
href='http://biz.yahoo.com/ap/060327/bolivia_airline.html?.v=2&printer=1'>Read
more.
name='14'>Arrest Warrant Issued in
w:st='on'>
size='3'>Austria
size='3'>for Refco's Bennett
size='3'>Vienna
size='3'>Austria
public prosecutor issued arrest warrants for Phillip Bennett, the former
head of the troubled
w:st='on'>New
York
Refco Inc. and the son of a former president of the bank that lent
Bennett hundreds of millions of dollars, the Associated Press reported
today. The move came one day after the prosecutor's office announced it
was investigating Bennett and Wolfgang Floettl Jr. on fraud and other
charges. Floettl Jr. is implicated in highly speculative dealings while
his father was head of the Bank Fuer Arbeit und Wirtschaft AG that led
to bank losses of just under 1 billion euros ($1.2 billion). Although
neither man is in
w:st='on'>
size='3'>Austria
the Austria Press Agency quoted prosecutor's spokesman Walter Geyer as
saying the warrants were issued on formal grounds when there is concern
that suspects might flee or conspire to hide wrongdoing.
The legal moves came four
days after the bank said it incurred losses of just under 1 billion
euros ($1.2 billion) through the financing of investment companies
mainly engaged in interest rate and currency transactions in the
size='3'>Caribbean
implicated in those transactions. The bank has sued Refco and Bennett
for fraud, unjust enrichment and deception in an attempt to recover 350
million euros ($410 million) in loans to the troubled
w:st='on'>
York
broker.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/03/28/AR20060…'>Read
more.
w:st='on'>
name='15'>Moscow
Court
size='3'> to Hear Creditor Banks' Bankruptcy Suit Against
Yukos
The
w:st='on'>
size='3'>Moscow Arbitration Court
was scheduled to hear a bankruptcy suit by a consortium
of Western banks against Yukos, a case that was expected to pave the way
for the sale of the oil company's assets to a Kremlin-friendly business,
the Associated press reported today. The creditor banks called for the
company to be declared bankrupt after it defaulted on $482 million (401
million euros) of a $1 billion (830 million euros) syndicated loan
arranged three years ago by Societe Generale SA with Deutsche Bank AG,
Citigroup Inc. and HSBC PLC. The validity of the filing was unclear,
however, after Yukos issued a statement earlier this month saying that
the western banks had agreed to sell the debt back in December to
state-owned oil company Rosneft. Rosneft is itself seeking billions of
dollars from Yukos for alleged profit stripping and tax evasion at the
former Yukos production unit Yuganskneftegaz, which Rosneft acquired
after a disputed, state-ordered auction in December 2004 against the
company's $28 billion (23 billion euros) back tax debts.
href='http://biz.yahoo.com/ap/060328/russia_yukos.html?.v=2&printer=1'>Read
more.
href='http://biz.yahoo.com/ap/060328/russia_yukos.html?.v=2&printer=1'>