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Bankruptcy Bill Would Protect Worker Pensions
House Education and the Workforce Chairman John Boehner (R-Ohio) said
yesterday that a comprehensive bankruptcy reform bill slated for a floor
vote tomorrow would give workers additional pension protections when
their employer files for bankruptcy, CongressDaily reported. In a
letter to all House members, Rep. Boehner noted that included in the
broader bankruptcy bill is 'an important provision that responds
directly to this issue faced by Enron employees.' Boehner said the bill
protects withheld or contributed employee contributions from creditors
who may receive priority over workers during bankruptcy proceedings.'
This means that employee contributions to their retirement savings
accounts will be preserved because the contributions will be protected
from any creditor's claims,' he added, reported the newswire.
The House Rules Committee plans to hold a full committee meeting
today to formulate a rule on H.R.975, the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2003, for debate before the bill goes to
the floor.
Asbestos Bill Backers Upbeat Despite Crowded Agenda
With bills on pending medical malpractice, class action and asbestos
litigation reforms, Congress has its hands full on tort reform,
CongressDaily reported. But while reform advocates could find
themselves competing for lawmakers' time and patience, some asbestos
bill proponents believe that competition could be a boon for their
effort. If the Senate manages to report out an asbestos litigation
reform bill, House leaders have vowed to take it up, according to the
newswire. House Judiciary Chairman James Sensenbrenner (R-Wis.) has
pledged to 'hotline' any bill the Senate passes, moving it to the top of
the committee's agenda and through the House, where it would undoubtedly
pass. The question is whether a House-passed asbestos bill will contain
tort reforms considered unpalatable to Senate Democrats -- which in turn
could spark a partisan brawl of the sort that accompanied last year's
terrorism reinsurance legislation, reported the newswire.
Spiegel Seeks Bankruptcy
Spiegel Inc. filed for bankruptcy protection to reduce $1.7 billion in
debt it accumulated as sales fell and credit-card customers defaulted on
payments, Bloomberg News reported. Spiegel, which lost more than $727
million in the past two years, obtained $400 million in loans from a
group of banks led by Bank of America that will allow it to continue to
operate its catalogs and Eddie Bauer stores while in bankruptcy,
Bloomberg reported. The company ran short of cash when it was unable to
use excess cash from credit-card backed securities to fund its
operations. Spiegel, which pioneered the use of credit to sell women's
clothing and other goods through the mail in the early 1900s, has been
trying to sell its credit-card business to lessen its dependence on
credit-card sales at a time when defaults are rising, reported the
newswire. The Downers Grove, Ill.-based company listed $1.74 billion in
assets and $1.71 billion in debts in chapter 11 papers filed in U.S.
Bankruptcy Court in Manhattan.
Highlands Insurance Gets Approval of Plan to Pay Creditors
Highlands Insurance Group Inc., a property and casualty insurance
provider spun off by Halliburton Co., won bankruptcy court approval of
its plan to pay creditors, Bloomberg News reported. The company intends
to liquidate its assets 'over time'' and distribute the proceeds,
according to court papers. U.S. Bankruptcy Judge Lloyd King approved a
revised plan yesterday at a hearing in Wilmington, Del., reported the
newswire. Lawrenceville, N.J.-based Highlands sought bankruptcy
protection in October after defaulting on loans and reporting three
straight years of losses.
Former Merrill Executives Face SEC Fraud Charges
The Securities and Exchange Commission charged four former executives of
Merrill Lynch & Co. with aiding and abetting securities fraud in
connection with two 1999 transactions conducted Enron Corp., the Wall
Street Journal reported. The agency on Monday also brought charges
against Merrill itself but simultaneously approved a previously
announced settlement of the case with the brokerage firm, according to
the Journal. Under the agreement, reached in late February,
Merrill will pay a total of $80 million in disgorgement, penalties and
interest. The SEC had alleged Merrill improperly aided Enron in
overstating its earnings for 1999 by working with the failed energy
company on two separate transactions as the year drew to a close.
GAO Says Investment Banks Could Be Sued For Enron Deals
While investment banks usually aren't responsible for their client's
accounting, if they knowingly helped Enron commit fraud, the Securities
and Exchange Commission (SEC) 'has the authority to take legal action
against them,' the General Accounting Office (GAO) said a report issued
yesterday, Dow Jones reported. Making the case against Wall Street
investment banks won't be easy for the SEC, however, the GAO cautioned.
The GAO examined a handful of deals between Enron and Wall Street firms,
including Merrill Lynch & Co., Salomon Smith Barney, a unit of
Citigroup Inc. and J.P. Morgan Chase.
Adelphia Wins More Time To Negotiate With Creditors
Adelphia Communications Corp. on Monday won a court's permission for
more time to negotiate with its creditors a plan that will set the
course for the reorganization of the troubled cable operator, Dow Jones
reported. U.S. Bankruptcy Judge Robert Gerber gave Adelphia until
June 20 to submit its plan of reorganization and until August 21 to
solicit votes from creditors. Still, both deadlines could be pushed back
further, as the company reserves the right to ask for more time to
resolve issues it considers essential for getting a consensual plan,
reported the newswire.
Trustee In SLI Inc. Case Objects To Sale Plans For Unit
The U.S. Trustee in lighting company SLI Inc.'s chapter 11 case objects
to the company's proposed rules governing the sale of its miniature
lighting operations to M Capital LLC for about $100 million, Dow Jones
reported. In an objection filed with the U.S. Bankruptcy Court in
Wilmington, Del., the trustee said SLI's motion seeking approval of the
bidding procedures and a breakup fee for M Capital raises questions
about whether the company adequately marketed the business and is doing
its best to get the highest price, reported the newswire. A hearing on
the proposed bidding procedures is scheduled for Friday. Canton,
Mass.-based SLI and some of its subsidiaries filed for chapter 11
bankruptcy protection on Sept. 9, 2002, with the U.S. Bankruptcy Court
in Wilmington, Del., listing assets of $830 million and liabilities of
$721 million as of June 30.
S&P Withdraws Advanced Lighting Technologies Ratings
Standard & Poor's Ratings Services said yesterday it withdrew its
'D' corporate credit rating on Solon, Ohio-based Advanced Lighting
Technologies Inc., Dow Jones reported. At the same time, Standard &
Poor's withdrew its 'D' rating on Advanced Lighting's $50 million senior
secured credit facility and its $100 million of senior unsecured notes.
The corporate credit rating was lowered to 'D' on Feb. 28, 2003,
following the company's voluntary filing for protection under chapter 11
of the U.S. Bankruptcy Code. The company plans to operate its business
while it seeks to restructure its debt with senior lenders and unsecured
bondholders, as well as the preferred stock held by General Electric
Co., reported the newswire.
WorldCom Seeks Court OK Of Discount Plans With SBC
Communications
WorldCom Inc. is seeking bankruptcy court authorization to enter
discount pricing plans with SBC Communications Inc. that could save
WorldCom $360 million over 60 months, according to court papers, Dow
Jones reported. The filing said WorldCom in recent months expressed
interest in the two discount plans, but SBC Communications said it
required bankruptcy court approval before entering the plans. WorldCom
said it believes the plans are within the ordinary course of business
and don't require court approval. The U.S. Bankruptcy Court in Manhattan
has scheduled a hearing to consider the discount plans for April 8,
reported the newswire.
W.R. Grace's $250 Million DIP Loan Extended Three Years
W.R. Grace & Co. on Friday won a three-year extension of its $250
million debtor-in-possession financing agreement with a group of lenders
led by Bank of America N.A, Dow Jones reported. The company said it
needs to extend the agreement to deal with cash requirements, including
probable large pension plan contributions and possible settlements of
environmental, tax and other disputes. The loan will end either when the
company emerges from bankruptcy or on April 1, 2006, whichever is
earlier, according to the order signed Friday by Judge Judith K.
Fitzgerald of the U.S. Bankruptcy Court in Wilmington, Del.,
reported the newswire.
KMART
Kmart Former Executives Plead Not Guilty to U.S. Fraud
Charges
Two former Kmart Corp. vice presidents pleaded not guilty to federal
fraud charges that they overstated revenue, Bloomberg News reported.
Enio Montini and Joseph Hofmeister were indicted on securities fraud and
conspiracy charges on Feb. 26, in the first criminal case stemming from
the retailer's bankruptcy. No other indictments have been issued and the
U.S. attorney's office in Detroit declined to comment on any future
charges, reported the newswire.
Kmart Objects To Fleming's $1.4 Billion Claim In Chapter 11
Case
Kmart Corp. said a $1.4 billion claim filed against it by Fleming Cos.
in Kmart's bankruptcy case was 'artificially inflated' and that it
didn't match with the statements of Fleming's own executives, Dow Jones
reported. Fleming filed the pre-petition claim earlier this month,
seeking payment for profits it said would have occurred under a canceled
contract with Kmart, including reimbursement for payments that Fleming
continues to make on behalf of Kmart to third parties. Kmart said in its
objection to Fleming's claim, obtained by Dow Jones Newswires on Monday,
that there were no minimum purchase requirements under the agreement and
that Fleming's claim would amount to less than $190 million.
US AIRWAYS
Fund Dominates US Airways' Board
David G. Bronner, whose Alabama pension fund is the lead investor in the
US Airways Group, will become one of eight new directors on the
airline's board, US Airways said in court documents filed last week, the
NewYork Times reported. Under terms of US Airways' restructuring, the
Retirement Systems of Alabama, of which Bronner is the chief executive,
received eight seats on the board, plus 70 percent voting control of the
airline. The slate of board members is set to be considered by a
bankruptcy judge today. US Airways hopes to emerge from bankruptcy by
March 31, reported the Times.
US Airways Trustee Opposes Plan on Eve of Hearing
A U.S. Bankruptcy Trustee objected on Monday to US Airways Group Inc.'s
plan to emerge from chapter 11, one day before a hearing on the No. 7
U.S. airline's reorganization plan is slated to begin, Reuters reported.
The trustee said in a court filing that US Airways' plan to release
current and former executives, board members and lawyers from potential
liability arising from the bankruptcy would violate federal and state
law. 'Such releases are not part of any global settlement or deal that
benefits this bankruptcy estate,' U.S. Trustee W. Clarkson McDow Jr.
said in the filing with the U.S. Bankruptcy Court in Alexandria, Va.,
reported the newswire. A spokesman for the Arlington, Va.-based airline,
David Castelveter, said: 'We are working to resolve as many of these
objections as possible prior to Tuesday's hearing, but if not, we
believe we will prevail before the court,' reported Reuters.
US Airways Wins Creditor Approval of Bankruptcy
Plan
US Airways Group Inc. said more than 80 percent of its creditors have
approved its plan to reorganize under new ownership, Bloomberg News
reported. The creditors, who are owed more than $10 billion, voted to
accept the plan, US Airways said in a statement. The Arlington,
Va.-based carrier had said it might end up going out of business without
clearance to come out of bankruptcy by March 31.
AMERICAN AIRLINES
American Airlines, Unions To Start Formal Talks On Cost
Cuts
Representatives of American Airlines Inc. were expected on Monday to
begin formal meetings with two unions representing flight attendants,
ground workers and mechanics, the Associated Press reported. According
to the Fort Worth-based airline, it would be working for the first time
with all three of its major unions in an attempt to cut labor costs and
avoid federal bankruptcy court. Union officials have said they can have
a deal in hand and ratified within 60 days, reported the newswire.
TWA Flight Attendants Lost Vouchers in AMR Sale, Court
Rules
AMR Corp.'s American Airlines doesn't have to honor travel vouchers
issued to flight attendants of bankrupt Trans World Airlines, whose
assets it purchased in 2001, an appeals court ruled, Bloomberg News
reported. The vouchers, won after 19 years of litigation, were
terminated by the $742 million sale of TWA assets to American, the
U.S. 3rd Circuit Court of Appeals said. The sale also ended the Equal
Employment Opportunity Commission's right to pursue separate bias claims
against TWA, the court ruled, concluding that flight attendants and the
commission might be seen as unsecured
creditors, reported the newswire.
UAL's United Seeks Judge's Permission to Reject Labor
Contracts
UAL Corp. asked a bankruptcy judge for permission to seek the rejection
of labor contracts by May 1 unless employee unions agree to permanent
wage reductions, a company lawyer said, Bloomberg News reported.
Temporary cuts designed to save the bankrupt airline about $70 million a
month took effect in January and will expire on May 1 without new
agreements. UAL's United Airlines is seeking to reduce what were the
industry's highest labor costs. U.S. Bankruptcy Judge Eugene
Wedoff can let United impose contract terms if no agreement is
reached by the deadline, reported the newswire.
Conseco, Trump `Close' on Valuation of General Motors
Building
Conseco Inc.and real estate executive Donald Trump are close in their
valuations of Manhattan's General Motors building, a lawyer for Trump
said, Bloomberg News reported. A U.S. judge in Chicago scheduled an
April 10 trial over a possible sale of the 50-story tower. Conseco,
which filed the third-largest U.S. bankruptcy in December, is seeking to
sell the building for $500 million and have the new owner assume the
mortgage payments. Trump, who has a stake in the building, said he had a
previous agreement to pay $295 million and take over the $700 million
mortgage, reported the newswire.
Meeting of the Judicial Conference Advisory Committee on Rules of
Bankruptcy Procedure Announced
The Judicial Conference of the United States, Advisory Committee on
Rules of Bankruptcy Procedure, announced that it will hold a two-day
meeting. The meeting will be open to public observation, but not
participation, on April 3-4, 2003, in Longboat Key, Fla.
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