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January 3, 2006
id='1'>U.S. Supreme Court to Decide if 'Mootness Rule' Allows
Sales of Homes by Bankruptcy Trustees
On Jan. 6, 2006, the U.S. Supreme Court will likely begin
consideration of a petition for Writ of Certiori filed by Roger and
Christine Fearing of Woodland Hills, Calif., on Nov. 7, 2005, regarding
their homestead exemption, according to an eMediaWire report today. Upon
filing for chapter 11 protection in January 2000, the Fearings claimed a
homestead exemption to which no party objected. The case was converted
to chapter 7 in July 2002. The trustee and bankruptcy court then sold
their home, despite their exemption. The Fearings allege that, in
January 2003, Bankruptcy Trustee David Seror, through his
attorney/partner Peter Davidson, both of the firm Moldo Davidson Fraioli
Seror & Sestanovich LLP, slipped verbiage into an order, which was then
signed by Bankruptcy Judge Kathleen Thompson Lax, erroneously approving
a sale 'free and clear' of their homestead exemption.
href='http://www.emediawire.com/releases/2006/1/emw327602.htm'>Read
more.
id='2'>Collection Call Device Aids Bankruptcy Filers
A Pensacola, Fla.,
man who spent 20 years practicing law is the co-inventor of a device to
redirect collection calls from people who file for bankruptcy, the
Pensacola News Journal reported today. Kenneth Jursinski helped
invent a
device that allows debtors to transfer creditors to an automated voice
message containing legal information the creditor needs. 'The driving
force to file bankruptcy is not a lack of money,' Jursinski said. 'It's
the constant and often harassing demands for money.' The Debtor
Activated Attorney Notification system, DAAN, is designed to
automatically inform the caller of the attorney's representation and
contact information and politely advises the caller not to call back
under penalty of law. It also captures the date and time of notification
and sends the information to the attorney.
href='http://www.pensacolanewsjournal.com/apps/pbcs.dll/article?AID=/20060103/BUSINESS/601030306/1003'>Read
more.
Airlines
id='3'>United Airlines Says It's Closer to Exiting
Bankruptcy
United Airlines
said last week that all classes of its creditors have voted to accept
its reorganization plan, Reuters reported today. The No. 2 U.S. airline
has been in bankruptcy since December 2002 and aims to exit court
protection in February. The company said the court has scheduled a Jan.
18 hearing to confirm the plan. A key objection came from creditors and
unions that disapprove of an incentive plan that would grant management
18.75 million shares, or 15 percent, of the restructured United. Unions
representing flight attendants and ground workers complained that the
plan is unfair to workers, who made steep wage and benefit concessions
to keep the struggling carrier afloat. The airline has argued, however,
that the incentive plan is in line with usual business practices that
put a certain amount of managers' compensation at risk in the stock
market.
id='4'>Independence Air to Discontinue Operations
FLYi, Inc., parent
of low-fare airline Independence Air, announced today that because of
the continued financial challenges facing the company, it will
voluntarily discontinue all scheduled flights planned to depart after
7:00 p.m. on the evening of Thursday, Jan. 5, according to a company
press release. The company is seeking bankruptcy court approval to
automatically refund customers with reservations for flights scheduled
to depart beyond that time.
href='http://www.flyi.com/company/pressarchive/2006/jan/010206.aspx'>Read
more.
id='5'>Northwest Mechanics Reject Offer
A majority of the
Northwest Airlines mechanics who voted on a settlement agreement that
would have ended a four-month strike rejected the offer, according to
the Aircraft Mechanics Fraternal Association, the Wall Street
Journal reported Saturday. The deal, rejected by 57 percent of those
voting, would have made the strikers eligible for four weeks of
severance pay and allowed them to apply for 26 weeks of unemployment
benefits. Northwest, which filed for bankruptcy court protection in
September, has said the terms it imposed on the replacement workers,
which included outsourcing the majority of its technician and
aircraft-cleaner positions, are providing it with the $203 million in
annual savings it was seeking from that work group. Northwest, based in
Eagan, Minn., said it was disappointed that the union declined to ratify
href='http://online.wsj.com/article/SB113596485440334800-email.html'>Read
more.
id='6'>New Mayor Says Pennsylvania City Faces Bankruptcy
As Olean, Pa.,
officials rung in the new year, they were bracing themselves for a
pending financial crisis, one mayor-elect David Carucci says could drive
the city into bankruptcy, according to yesterday's The Times
Herald.
Carucci said he plans to ask the Common Council to allow the city to
borrow up to $900,000 so the city can make payroll in January and meet
other financial obligations. He said the city has to pay the state $1.2
million in January to support the state employees pension fund. The city
also has to pay about $700,000 in salaries to its own employees.
Increases in payments to the pension fund following the 2001 stock
market crash wiped out the city's surplus account.
href='http://www.zwire.com/site/news.cfm?newsid=15854837&BRD=2725&PAG=461&dept_id=562746&rfi=6'>Read
more.
id='7'>Owens Corning Files New Bankruptcy Plan to Pay Asbestos
Claims
Owens Corning, the
largest U.S. insulation maker, filed a new bankruptcy reorganization
plan aimed at wiping out the company's estimated $10.2 billion in
asbestos liabilities, Bloomberg News reported Sunday. The plan, filed
yesterday in the U.S. Bankruptcy Court in Wilmington, Del., offers those
claiming Owens Corning's asbestos-laden products injured them cash and
stock in the reorganized company in exchange for their claims. Owens
Corning sought chapter 11 protection in October 2000 after being swamped
href='http://www.bloomberg.com/apps/news?pid=10000087&sid=aDruU4gW5MPo&refer=top_world_news'>Read
more.
id='8'>New Laws Putting Brakes on Texas Filings
Before the
tightening of bankruptcy laws, there was a dramatic increase of cases
filed in Texarkana, Texas, divisions of U.S. Bankruptcy Court, records
show, the Texarkana Gazette reported Sunday. Since the new laws
took
effect, the number of bankruptcy cases filed has decreased
significantly. 'It was a complete rewrite of the law. It does not
prohibit someone from filing, but it definitely makes us attorneys work
a lot harder,' said Jack Gooding, a Texarkana lawyer who specializes in
bankruptcy law.
href='http://www.texarkanagazette.com/articles/2006/01/01/local_news/news/news04.txt'>Read
more.
id='9'>Bankruptcy Judge Rules Churches Belong to Diocese
A bankruptcy judge
in Oregon has ruled that the Archdiocese of Portland, not its member
parishes, owns Roman Catholic churches and schools, UPI reported Friday.
Judge Elizabeth Perris's decision means that about $500 million
in
assets could be used to pay damages to victims of sexual abuse by
priests. The judge did not decide whether forcing sales of church
buildings would violate the religious freedom of Catholics in western
Oregon, the Portland Oregonian reported. The diocese had settled
with
130 victims for a total of $53 million when it filed for bankruptcy and
faced millions of dollars more in claims.
id='10'>Consumers Left in Limbo When Retailers Go Bankrupt
Consumer Alex
McNiff and Levitz customers across the Northeast have been in limbo
about orders since the New York-based furniture retailer declared
chapter 11 bankruptcy Oct. 11, closing all three Delaware locations,
DelawareOnline.com reported yesterday. A December buyout of the chain
has brought a promise from new owners that all back orders will be
filled. But word has been slow to reach customers like McNiff, who says
he felt he had no place to turn. Consumers often don't have, or know how
to get, access to information sources that would warn of a company's
financial situation, and don't know where to turn if they find the store
href='http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20060101/BUSINESS/601010320/1003'>Read
more.
id='11'>$30 Million Bailout Plan for NYRA Approved
New York Governor
George Pataki and state officials agreed Dec. 30 to a $30 million
bailout plan for the New York Racing Association to help stabilize its
finances and keep racing going uninterrupted, the Associated Press
reported yesterday. The agreement came just hours before NYRA was set to
head to a bankruptcy court. NYRA President Charles Hayward said
officials determined earlier this week that NYRA would not have enough
money to pay this weekend's purses, and that a bankruptcy filing was
needed by week's end. NYRA still has not made its 2005 pension payments
and is behind on some of its property tax bills. Together, those two
bills total $22 million. On top of that, Hayward said, NYRA has
projected a net cash flow of between $7 million to $10 million next
year. Read
more.
id='12'>Bankruptcy Filings Extend Fitzgeralds' Purchase Time
Three related
companies filed for bankruptcy reorganization Friday to buy time so that
a public company can 'step into their shoes' to buy Fitzgeralds
Casino-Hotel in downtown Reno, Nev., the Reno Gazette-Journal
reported
Saturday. LLH Holdings and two other companies filed for chapter 11
protection Friday morning to protect their contract to buy the
hotel-casino. The contract would have expired today. At a hearing Friday
afternoon, U.S. Bankruptcy Judge Gregg Zive granted a temporary
restraining order to maintain the status quo of the contract until Jan.
9 when another hearing is scheduled for 3 p.m. In the meantime, it will
be business as usual for Fitzgeralds, which is supervised by a court
appointee.
href='http://news.rgj.com/apps/pbcs.dll/article?AID=/20051231/NEWS10/512310312/1016/NEWS'>Read
more.
id='13'>Boston Diocese's Offer in Settlement Less than 2003
Claim
The Catholic
Archdiocese of Boston has offered to settle another round of sexual
abuse claims for less per person than it paid in hundreds of cases two
years ago, the Associated Press reported Saturday. The offer was for
$5,000 to $200,000 per claim, depending on the severity of the abuse,
according to lawyers for both the plaintiffs and the archdiocese. The
Boston Globe, quoting unidentified plaintiffs' lawyers, reported
Friday
that the payout would total about $7.5 million for about 100 plaintiffs.
That would amount to an average payout of about $75,000 if everyone were
paid. The 2003 settlements, to 554 people, averaged $153,000.
href='http://www.buffalonews.com/editorial/20051231/1061655.asp'>Read
more.
id='14'>Anchor Glass Plan Filed
Anchor Glass
Container filed its reorganization plan Friday, BankruptcyData.com
reported today. Anchor's plan will reduce the company's long-term debt
by $380 million. The terms of Anchor's plan call for a debt-for-equity
swap that will give Anchor's senior secured noteholders and other
secured creditors 100 percent of the company's equity. Anchor will exit
chapter 11 as a privately held company with long-term debt of
approximately $125 million. To ensure strong liquidity, Anchor will
also put in place a revolving credit facility of at least $50 million.
Unsecured creditors will receive a cash distribution of approximately 7
percent of their claims. Current equity holders are proposed to receive
an unspecified number of warrants having a de minimis value.
id='15'>American Business Hiring Approval Sought
Documents were
filed in the U.S. Bankruptcy Court by George Miller, American Business
Financial's trustee, seeking to employ Ciardi & Ciardi as special
counsel for the prosecution of litigation related to short selling of
the company's stock pre-petition, BankruptcyData.com reported today. The
documents state that compensation for the services performed by Ciardi &
Ciardi shall be 40 percent of the proceeds of the prosecution,
settlement or other resolution of the Short Seller Litigation. In
addition, Ciardi will be reimbursed for all costs associated with this
engagement.
id='16'>Bankrupt Refco Unit Raises Debt Estimate
Refco Capital
Markets, a bankrupt unit of the futures broker Refco, said Friday that
it owed customers almost $4.2 billion, about $500 million more than the
parent company estimated in early December, Bloomberg News reported
Saturday. According to documents filed Friday with the U.S. Bankruptcy
Court in Manhattan, the customer owed the most is VR Global Partners,
with almost $720 million in cash and securities held in Refco Capital
Markets accounts. Investment funds controlled by James B. Rogers Jr. are
owed more than $372 million. At least 18 customers have sued Refco
Capital Markets, demanding the return of almost $2 billion. Liabilities
are $5.34 billion, including $718 million owed to affiliates. Refco and
23 affiliates filed for bankruptcy protection on Oct. 17, owing
creditors $16.8 billion.