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September 2,
2008
Alabama County Offers Plan to Avoid
Bankruptcy
Alabama's largest county offered a plan Friday to restructure its $3.2
billion sewer debt and put off filing the largest municipal bankruptcy
in U.S. history, the Associated Press reported. Gov. Bob Riley (R) said
that an attorney for Jefferson County proposed restructuring the bond
debt at a lower, fixed rate over a longer term, and Wall Street
creditors allowed the county to delay any further interest payments at
no cost until Sept. 30. Creditors agreed to respond this week to the
county's proposal for restructuring the debt.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/08/29/AR2008082901725.html'>Read
more.
PBGC Objects to Sea Containers'
Chapter 11 Plan
The Pension Benefit Guaranty Corp. (PBGC) on Thursday objected
to Sea Containers Ltd.'s reorganization plan, claiming that it does not
address the debtors' responsibilities to the pension plan of a nondebtor
subsidiary, Bankruptcy Law360 reported on Friday. The PBGC
argues that even though the subsidiary, Sea Containers America Inc.
(SCA), is not a debtor in the chapter 11 proceedings, the debtors are
still liable for certain statutory obligations regarding SCA's pension
plan. The case is Sea Containers Ltd., case number 06-11156, in the U.S.
Bankruptcy Court for the District of Delaware.
href='http://bankruptcy.law360.com/articles/67735'>Read more.
(Subscription required.)
Fed Official Says Institutions Must Be
Allowed to Fail
Federal Reserve Bank of Kansas City President Thomas Hoenig said that
for economies to work best, institutions must be allowed to fail,
Bloomberg News reported yesterday. Changes in financial markets combined
with the subprime-mortgage crisis have “raised anew questions
about the role of central banks in maintaining financial
stability,” Hoenig said. The subprime-mortgage collapse has taken
a toll on banks and other financial companies, which have reported $514
billion of writedowns since the start of 2007. “The `Too Big to
Fail' issue will only grow in importance as the consolidation of the
financial industry grows in both size and scope in future
decades,” Hoenig added.
href='http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aPUUANG5h4G0'>Read
more.
Delphi Revising Reorganization
Plan
Auto parts supplier Delphi, which has been operating under bankruptcy
protection for nearly three years, is working on a revision to its
reorganization plan and is not looking to liquidate the company, the
Associated Press reported on Saturday. Delphi Corp.'s previous plan
included a group of equity investors that had planned to inject as much
as $2.55 billion into the reorganized company. The group, led by hedge
fund Appaloosa Management LP, backed out of the deal in April. That led
Delphi to pursue a contentious fraud lawsuit against the group. One of
Delphi's looming problems is a Sept. 30 deadline to transfer $1.5
billion in pension obligations to its former parent, General Motors
Corp. GM had expected to take on the obligation when Delphi left court
protection under the reorganization plan that included the investors.
That was on track to happen before the deadline until Appaloosa
balked.
href='http://www.buffalonews.com/businesstoday/localbusiness/story/426753.html'>Read
more.
Judge Approves Sale of Whitehall
Jewelers' Stores
Bankruptcy Judge Kevin Gross on Thursday signed off on
a deal for New Zealand-based jeweler Michael Hill International Ltd. to
buy 17 stores from Whitehall Jewelers Inc. for $5 million (NZD $7
million), Bankruptcy Law360 reported on Friday. The acquisition
assigns to Michael Hill Whitehall's rights with respect to store
fit-outs, leases and all other trading assets. The deal was originally
announced on Aug. 22. Michael Hill said that it had set a purchase price
for inventory at the 17 stores in and around Chicago and St. Louis at 80
cents on the dollar.
href='http://bankruptcy.law360.com/articles/67786'>Read
more. (Subscription required.)
Commentary: Detroit Automakers
Shouldn't Receive a Bailout
The three big U.S. car makers are angling for nearly $50 billion in
government aid, but Chrysler, Ford Motor and General Motors shouldn't
get handouts, according to a commentary in Saturday's Wall Street
Journal. Aside from the cost to taxpayers, a government safety net
for companies discourages prudent management. It also potentially puts
rivals at a disadvantage, making markets less efficient and ultimately
hurting consumers. The U.S. auto companies' problems are largely of
their own making as they didn't invest enough in smaller, more-efficient
vehicles when they had the chance a few years ago. Now that higher
energy costs have finally caught up with them, it is unconvincing to say
that the government should help them meet the tougher fuel-economy
regulations they have long opposed.
href='http://online.wsj.com/article/SB122004984406984757.html'>Read
more. (Subscription required.)
Tweeter Requests Exclusivity
Extension
Bankrupt consumer electronics company Tweeter Newco LLC asked a judge on
Thursday to grant an extension of its exclusivity period for three more
months, Bankruptcy Law360 reported on Friday. This was the
fourth such request in the case as the company's third extension request
expires on Sep. 3. A hearing date on the request was set for Oct. 22 and
creditors have until Sep. 17 to object. The case is In re Twtr et
al., number 07-10787, in the U.S. Bankruptcy Court for the District
of Delaware.
href='http://bankruptcy.law360.com/articles/67756'>Read
more. (Subscription required.)
For Airlines, No End in Sight to Fuel
Cost Struggles
Streamlined schedules and smaller fleets were meant to help the nation's
airlines cope with the high cost of jet fuel, but many
airlines spent the Labor Day holiday dealing with the fallout of
Hurricane Gustav, the New York Times reported today. While less
destructive than Katrina, Gustav nevertheless reminded the industry of
Katrina's painful impact. Within days of that storm, jet fuel prices
spiked by 50 cents a gallon to $2.42, then a record. Within two weeks,
both Northwest Airlines and Delta Air Lines filed for chapter 11
protection. The average price for jet fuel last week was $3.32 a gallon,
according to the Department of Energy. Airlines also said yesterday that
they were monitoring Hurricane Hanna, the next storm that could disrupt
air travel.
href='http://www.nytimes.com/2008/09/02/business/economy/02air.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
International
Alitalia Files for Bankruptcy
Protection
Italy's national airline Alitalia said Friday that it asked the
government to appoint an administrator and had declared insolvency to a
Rome court, the Associated Press reported. The airline has been losing
almost $3 million a day -- hurt by labor unrest, competition from budget
airlines and high fuel prices. The government has been trying to sell
its 49.9 percent stake in the airline following a failed bid by Air
France-KLM earlier this year.
href='http://www.cnn.com/2008/BUSINESS/08/29/alitalia.ap/index.html?section=cnn_latest'>Read
more.
Japan to Urge Banks to Boost
Lending to Small Firms
Japan's government will urge banks including Mitsubishi UFJ Financial
Group Inc. to lend more to small and mid-sized companies, Bloomberg News
reported today. Financial Services Minister Toshimitsu Motegi said that
Japan's Financial Services Agency will send letters to the nation's
large and regional banks today asking them to be more flexible in their
lending policies. Restrictive lending practices have contributed to
Japan's rising corporate bankruptcies, which climbed in July to the
highest in more than three years. The regulator has reviewed the issue
and surveyed or met with 51 small and middle-sized companies and
associations and 450 company managers, as well as regional banks, Motegi
href='http://www.bloomberg.com/apps/news?pid=20601101&sid=aRJ4J8oL_iKo'>Read
more.