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February 2, 2005
Bankruptcy Bill Introduced in the Senate
“Bankruptcy Abuse Prevention and Consumer Protection Act of
2005,” S. 256, was introduced yesterday in the Senate by the
Chairman of the Senate Finance Committee Charles Grassley
(R–Iowa). It is co-sponsored by Senate Banking Committee Chairman
Richard Shelby (R–Ala.) and Sens. Orrin Hatch (R–Utah), Tom
Carper (D–Del.), Ben Nelson (D–Neb.), Jeff Sessions
(R–Ala.), John Thune (R–S.D.), and Mike Enzi (R–Wyo.).
The bill is similar to the one passed by the House last year, but does
not include the controversial Sen. Charles Schumer (D–N.Y.)
amendment.
The
href='http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.256:'>Summary &
Status of S.256 are available online and the
href='http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?dbname=2005_record&page=S768&position=all'>full
text of the legislation begins in the third column of the
Congressional Record.
Rates Seen Rising as Fed Mulls Inflation
With a sixth straight U.S. interest rate rise considered a near
certainty, Federal Reserve policy-makers today will wrap up a two-day
meeting to consider how to shelter the economic expansion from
inflation, Reuters reported. In the first of eight annual meetings, and
one of just two extended sessions each year, the Federal Open Market
Committee started meeting yesterday and was set to begin again this
morning before announcing a decision on rates at about 2:15 p.m., the
newswire reported.
Business Groups Urge No Amendments on Class-Action Bill
The U.S. Chamber of Commerce and five other trade groups have urged
the Senate Judiciary Committee to reject all amendments during
Thursday’s markup of a bipartisan bill to change the rules for
class-action lawsuits, CongressDaily reported. The bill
“is the result of years of negotiation and compromise, and
deserves to be enacted without change,” the groups said on Monday
in a letter to Judiciary Chairman Arlen Specter (R–Pa.). Specter
has urged panel members to hold any contentious amendments for next
week’s floor consideration of the class-action bill, rather than
offering them during committee deliberations. Bill opponents are pushing
for amendments on civil rights, employment protections and other issues,
the newswire reported.
Study Ties Bankruptcy to Medical Bills
Hundreds of thousands of Americans file for personal bankruptcy each
year because of medical bills—even though they have health
insurance, according to a new study by Harvard University legal and
medical researchers, the New York Times reported. The study
provides a glimpse into a little-researched area connecting bankruptcy
and medical costs. About 30 percent of people said they filed for
bankruptcy because of an illness or injury, even though most of them had
health insurance when they first got sick, the newspaper reported. Read
the full article at
href='http://www.nytimes.com/2005/02/02/business/02insure.html?oref=login'>www.nytimes.com/2005/02/02/business/02insure.html?oref=login.
Tower Automotive Gets $725 Million In DIP Financing
Tower Automotive Inc. today said it received $725 million in
debtor-in-possession financing from J.P. Morgan as it filed for
bankruptcy protection, Reuters reported. The company said in a statement
its international operations in Europe, Asia, Brazil and Canada are not
included in the chapter 11 reorganization. Tower said it has requested
permission to continue paying employee salaries and benefits.
Credit Analyst Sees U.S. Air Liquidating by Year-End
US Airways Group Inc. will probably fail in 2005, a year that may
also see a Delta Air Lines Inc. bankruptcy, an analyst at research firm
CreditSights said yesterday, Reuters reported. “The 2005 outlook
for our airline industry is dismal,” Roger King, a debt analyst
specializing in airlines, said in a conference call. “High fuel
costs and declining yields in particular should push US Airways into
liquidation,” King said, the newswire reported.
Worldcom
WorldCom Ex-Controller Traces Improper Accounting Back to 1997
The former controller of WorldCom Inc. testified that he and
ex-finance chief Scott Sullivan used improper accounting in the
company’s books as far back as 1997, the online Wall Street
Journal reported. David Myers testified in U.S. District Court in
Manhattan that starting when he became controller in 1997, he and
Sullivan agreed to make various adjustments to the books of WorldCom.
Some of these adjustments were appropriate and some “could be
considered gray,” Myers said while being cross-examined by the
defense, the online newspaper reported.
U.S. Judge Rules Merrill Unit Isn’t Liable in WorldCom
Plan
A federal judge tossed out a lawsuit accusing a unit of Merrill Lynch
& Co. of failing to advise employees of the former WorldCom Inc. to
dump the company’s stock from their retirement plans, the online
Wall Street Journal reported. Judge Denise Cote of the U.S.
District Court in New York granted summary judgment, saying Merrill
Lynch Trust Co. wasn’t liable in its role as a trustee of the
company’s 401(k) plans.
Merger Bells About to Ring For MCI?
AT&T Corp.’s $16 billion merger with SBC Communications
Inc. has turned Wall Street’s eyes again to MCI Inc., one of the
few telecommunications companies left without a partner and already the
subject of unsuccessful takeover talks at least twice, the
Washington Post reported. Ashburn, Va.–based MCI is
smaller than AT&T, but the companies have suffered similar problems
in recent years as their core business of providing telephone service
became less relevant and profitable in a changing industry. With
AT&T’s merger with SBC, MCI is expected to follow, the
newspaper reported. Read the article at
href='http://www.washingtonpost.com/wp-dyn/articles/A55822-2005Feb1.html'>www.washingtonpost.com/wp-dyn/articles/A55822-2005Feb1.html.
Alliance Wins Round Ahead of Florida’s Enron Suit
A Florida jury next month takes up the state’s $300 million
suit against money manager Alliance Capital for buying stock in Enron as
its accounting woes widened just before it filed for bankruptcy three
years ago, Reuters reported. Two weeks ago, a circuit court judge ruled
that Alliance Management Holding LP had no contractual obligation to buy
only top-rated stocks for a state pension plan, among other key rulings
in the company’s favor. Following the collapse of Enron in
December 2001, the Florida State Board of Administration sued Alliance,
seeking more than $300 million in compensatory and punitive damages. The
board alleged breach of fiduciary duty, negligence, gross negligence and
violation of certain laws, the newswire reported.
Bankruptcy Court Gives Nod to Kaiser Agreement
Bankrupt Kaiser Aluminum Corp. yesterday said the U.S. Bankruptcy
Court had approved an intercompany agreement showing the company had
reached common ground with most of its creditors, Reuters reported. The
Houston-based company said it now intends to try to resolve remaining
issues quickly so it can file a reorganization plan within the next few
months in a bid to emerge from chapter 11 bankruptcy protection.
Falcon Products Files For Chapter 11 Bankruptcy
Falcon Products Inc. filed for chapter 11 bankruptcy protection in
St. Louis on Monday, Reuters reported. The filing will allow the company
to restructure its operations to compete in a softer market, it said.
The bankruptcy filing follows a year of executive problems at Falcon and
a Securities and Exchange Commission investigation into the
company’s inventory and accounting problems, the newswire
reported.