July 192004

Submitted by webadmin on Mon, 2004-07-19 00:00

July 19, 2004

Asbestos Talks Resume

Senate Majority Leader Bill Frist (R-Tenn.) and Minority Leader Tom
Daschle (D-S.D.) are expected to meet this week in an effort to
jumpstart the long-stalled asbestos bill. Frist is proposing a $140
billion trust fund to compensate asbestos victims. Daschle said
Frist’s proposal lacked enough details. “It was not a
complete proposal,” Daschle said. “It was part of what
we’re going to be discussing next week.” Frist’s
offer—which follows a proposal by Daschle in June for a fund as
large as $145 billion—is significantly less than the $149 billion
labor unions have insisted is needed. Sources said Frist’s plan
would include $136 billion from insurers and companies with asbestos
liabilities, with an additional $4 billion coming from existing private
asbestos trust funds, the newswire reported.

Staff-level meetings are ongoing and leaders from both sides of the
aisle say they hope an agreement can be reached before adjournment. But
without the backing of labor unions, which some key senators have said
is needed to win enough votes in the Senate, time could run out on this
debate.

No Action on Class Action

Senate Republicans’ failure to block a Democratic filibuster
this month on legislation to overhaul the rules for class action
lawsuits effectively killed the bill’s prospects for enactment
this year, CongressDaily reported. “We’ve
missed a golden
opportunity to get something done for consumers. It’s a real
shame,” Finance Chairman Charles Grassley (R-Iowa), the
bill’s chief sponsor, said after the Senate rejected cloture on a
contentious procedural move by Majority Leader Bill Frist (R-Tenn.).

Still, business groups are urging lawmakers to revive the legislation

before Congress adjourns. “Although we are disappointed at the
procedural gimmicks that continue to stymie an up-or-down vote on the
bill, we remain committed to passing this reasonable and vital piece of
legislation this year,” said Stanton Anderson, executive vice
president and chief legal officer of the U.S. Chamber of Commerce and
chairman of the Class Action Fairness Coalition, the newswire
reported.

House to Hold Hearing on Corporate Governance

The House Financial Services Committee plans to hear testimony
Wednesday on corporate governance and accounting for oil and gas
reserves, CongressDaily reported. The panel also has
scheduled a hearing
Thursday on the two-year-old Sarbanes–Oxley corporate governance
law’s effects on market and investor recovery.

Consumer Prices Rise Modestly, But Pay Increases Lag Behind

U.S. consumer prices rose only modestly in June, but meager pay
increases and a decline in working hours left many workers worse off in
terms of inflation-adjusted wages, the Wall Street Journal
reported. The U.S. Department of Labor on Friday said the consumer-price
index, a widely watched barometer of inflation, rose 0.3 percent last
month, half the rate recorded in May. Moderating food and energy prices
accounted for much of the slowdown. Analysts said the numbers suggest
the U.S. Federal Reserve will continue to raise interest rates gradually
in the months ahead, perhaps lifting short-term interest rates
one-quarter percentage point at its next meeting of policy-makers on
Aug. 10, the newspaper reported. The Labor Department also reported,
however, that the average weekly earnings of production and
non-supervisory workers, adjusted for inflation, in June decreased 0.8
percent from May. Average hourly earnings for such workers edged up 0.1
percent, but that was more than offset by a decline of 0.6 percent in
average weekly hours and the rise in consumer prices. Compared with a
year earlier, inflation-adjusted earnings for these workers were down
1.4 percent.

Why the Bankruptcy Bill Won’t Go Away (Christian Science
Monitor
)

An article in the Christian Science Monitor explores why

the bankruptcy bill keeps coming back to life.
href='http://www.csmonitor.com/2004/0719/p17s01-cogn.html'>Read the
article.

U.S. Judge to Hear Plan for Bankrupt Airline Avianca

A U.S. bankruptcy judge on Friday set an August date for a hearing on

a plan that could allow Colombian airline Avianca to emerge from
bankruptcy, Reuters reported. Judge Allan Gropper of the U.S. Bankruptcy

Court for the Southern District of New York set Aug. 18, 2004, for the
hearing on a plan that will include an offer by Brazilian businessman
German Efromovich to take a 75 percent stake in the flagship
airline.

Under the rescue plan, the Colombia’s Coffee Growers’
Federation would also be able to convert an $18 million loan to the
airline into a 25 percent stake. After three years, the federation will
have the right to sell its stake to Efromovich and recover its
investment. Until a plan to emerge from bankruptcy is confirmed by
shareholders, which is expected later this year, Avianca can entertain
other offers, but cannot solicit them, the judge said, the newswire
reported.

Hasbro Earnings Up, But Miss Estimates

Hasbro Inc., the No. 2 U.S. toymaker, on Friday reported a
weaker-than-expected rise in second-quarter earnings, as sales of its
once-hot Beyblade declined, Reuters reported. Pawtucket, R.I.-based
Hasbro posted net income of $18.8 million, or 6 cents per share, up from

$11.4 million, or 6 cents per share, a year earlier. Analysts, on
average, had expected profit of 8 cents per share, according to Reuters.

Chief Executive Alfred Verrecchia said he was confident Hasbro could
meet its full-year goal of increased revenue and earnings, despite an
uncertain retail environment and an expected decline from Beyblade.

The U.S. toy-selling environment has been weak, as cut-throat price
competition and slowing sales have pushed retailers like KB Toys and FAO

Schwarz into bankruptcy. Toys R Us Inc. is evaluating its operations and

analysts expect it to close some stores, the newswire reported.

Breuners Home Furnishings Gets $1 Million Interim Chapter 11
Cash

Liquidating retailer Breuners Home Furnishings Corp. on Friday
received approval to use $1 million to fund operating expenses until a
full hearing can be scheduled on its bankruptcy financing request, the
online Wall Street Journal reported. U.S. Bankruptcy Judge
Charles Case orally approved a consensual arrangement between Breuners
and Deutsche
Bank, agent for the company’s lenders, that permitted the use of
cash that the banks say is collateral for their loans. Case is expected
to set a hearing next week to review a $3 million interim
debtor-in-possession finance proposal for Breuners, its real estate
affiliate, and its parent, Huffman Koos Inc., which also filed chapter
11 petitions in Delaware on Wednesday.

Enron’s Reorganization Plan Cleared by Bankruptcy Judge

A federal bankruptcy-court judge in the Southern District of New York

approved Enron Corp.’s chapter 11 reorganization plan, clearing a
path for thousands of creditors holding $63 billion in claims to
eventually split about $12 billion in cash, as well as stock in newly
formed companies that will probably hold Enron assets, the Wall
Street Journal reported.

Judge OKs Halliburton Asbestos Settlement

A federal bankruptcy judge approved a $4.2 billion settlement between

two subsidiaries of energy services company Halliburton that could end
the companies’ long-running liability over asbestos claims,
according to court documents filed on Friday, Reuters reported. The
court’s approval, which was widely expected, paves the way for
Halliburton’s DII Industries and KBR, formerly known as Kellogg
Brown & Root, to emerge from bankruptcy proceedings that were initiated
late last year to address the asbestos litigation. Halliburton, which
will establish a trust fund to pay possible future claims, also reached
agreements with its key insurers to pay out on the asbestos claims
earlier this year. The company has said it would take a write-down of
about $615 million, $1.40 per share, related to those insurance
settlements, the newswire reported.

Bankruptcy a Risk for Portland Archdiocese

By filing for bankruptcy, the Roman Catholic Archdiocese of Portland
has begun a complicated legal process that could backfire—perhaps
forcing church officials to reveal documents they would rather not
disclose and give up assets, legal experts say, the Associated Press
reported. Archbishop John Vlazny has said chapter 11 bankruptcy is the
best way to sort out the nonprofit organization’s struggling
finances and settle more than 60 clergy sex-abuse cases pending against
the archdiocese. But the July 6 filing, the first by an American
diocese, is also a roll of the dice. “Portland has taken a huge
gamble,” said Patrick Schiltz, a law professor at the University
of St. Thomas in Minneapolis. “If the gamble pays off, it will
extinguish their legal liabilities, and they’ll get back on the
right financial track.” Otherwise, Schiltz said, the church could
be forced to sell off parishes and reveal information that could result
in future litigation, the newswire reported.

Under civil law, schools, parishes and other holdings belong to the
archdiocese and can therefore be used to pay off creditors, AP reported.

But canon law says the archdiocese holds those assets in trust for the
parishes, who are the true owners. Archdiocese spokesman Bud Bunce said
the question of what constitutes archdiocese assets will dominate
bankruptcy hearings. “Once we demonstrate that the parish property

is held in trust for the parish, and its basic operations are separate,
that will clarify the situation somewhat,” he said.

US Airways CEO Urges Unions to Strike Deals

US Airways CEO Bruce Lakefield, in an urgent plea to employees,
called the No. 7 U.S. airline the “most vulnerable” among
its troubled peers and said he could not preserve any jobs with
certainty given the carrier’s high costs, Reuters reported.
Fifteen months after emerging from bankruptcy, US Airways has turned to
its unions seeking another $800 million in labor concessions after
workers agreed to huge givebacks in chapter 11. Lakefield has said the
airline must trim $1.5 billion in annual costs by September to avoid
another possible bankruptcy. US Airways pilots are weighing new
concessions, and flight attendants said this week they would discuss new

givebacks with the company.

Horizon Natural Wants Approval to Reject Union Pacts

Horizon Natural Resources Inc. says it can’t sell its assets
without rejecting collective bargaining agreements with unionized miners

and terminating health care benefits of miners that have retired. The
coal company is asking the U.S. Bankruptcy Court in Ashland, Ky., to
terminate its contracts with the United Mine Workers of America and
release it from paying health care benefits to union retirees because it

believes it will get better prices for the mines in liquidation that
way. The union pacts have a successorship clause that states operations
won’t be sold unless the buyer assumes the agreement with the
union, court papers said. If it wants to get out of the contracts,
Horizon Natural must get court permission to reject the pacts under the
Bankruptcy Code.

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NorthWestern President Predicts Healthy Company After Chapter
11

The president of NorthWestern Corp. predicts the company will emerge

from its bankruptcy reorganization later this year financially sound,
but said he expects the creditors who will own it are likely to sell the

company. In the meantime, Gary Drook said, “We’ve got to
make this the best utility in the country,” according to an
Associated Press column. Drook, president and chief executive officer of

the Sioux Falls, S.D., company, spoke Thursday to a Helena, Mont., civic

group, outlining a number of steps the company has taken to ensure its
financial troubles are behind the company.