Bankruptcy Bill Could Hurt Mentally Disabled
As the widening use of plastic has made credit available to thousands of
people with mental disabilities, experts say a bankruptcy law overhaul
that Senate leaders hope to pass would shrink the safety net of the
mentally ill, according to the Associated Press. The bill,
which cleared the House by a voice vote on Oct. 12 and faces a
presidential veto, would rewrite bankruptcy law to make it harder for
people to erase credit card and other debts. Proponents say the
measure would stem the tide of personal bankruptcies, while opponents
argue that a large number of bankruptcy filings in a healthy economy is
at least partly due to credit card companies and retailers
indiscriminately mailing out billions of solicitations to hook
consumers.
The mentally disabled often cherish the sense of self-reliance a
credit card gives them, but some people question whether retailers and
credit card companies act responsibly in enticing them with pre-approved
cards and low introductory interest rates. 'We have had instances
where aggressive marketing, including pre-approved credit cards, ... has
caused people to do things that got them into a bit of a jam,' said Mark
Russell, executive director of the Arc of Northern Virginia, the local
chapter of an advocacy and support group for people with mental and
developmental disabilities. The bankruptcy bill 'takes a
population that may have more difficulty dealing with consumer credit
and takes away one of the main avenues they have ... if they get into
trouble with it,' said Elizabeth Warren, a professor and bankruptcy
expert at Harvard Law School. 'What this bill tries to do is shrink the
safety net.'
Henry Hildebrand, a bankruptcy trustee in Nashville, Tenn., who
favors in principle an overhaul of the laws, warned that 'the additional
hurdles are going to be insurmountable for some' mentally disabled
debtors if the current measure is enacted. But Sharon Gamsin, a
spokeswoman for MasterCard International in Purchase, N.Y., said the
bill wouldn't affect mentally disabled people differently from others
because it's based on people's ability to repay their debts. If a
disabled person has a large income and is deemed capable of repaying his
or her debts, 'they shouldn't be given special consideration,' she
said.
FCC Chairman Warns of Wireless Auction Delay
Effect
Urging against delaying the December auction of valuable wireless
airwaves, Federal Communications Commission (FCC) Chairman William
Kennard said yesterday that a delay would likely push back other
auctions of airwaves, according to a Reuters report. “It is
important to the public and to our economy to proceed promptly with
these auctions and make more spectrum available as quickly as
possible,” he said in a letter to House Commerce Committee
Chairman Tom Bliley (R-Va.) and ranking minority member John Dingell
(D-Mich). “Delay of the Dec. 12 auction would affect the
timing of other auctions, including the auction of licenses for the 700
megahertz spectrum now scheduled for March,” said Kennard.
The Clinton administration and the Senate Republican leadership have
been considering ordering the delay of a Dec. 12 auction of wireless
licenses once held by NextWave Personal Communications Inc.
NextWave, which is undergoing bankruptcy reorganization, bid about $4.8
billion for 90 licenses in 1996 but was unable to raise the funds to pay
the FCC for the licenses and went into bankruptcy protection in
1998. NextWave has requested the FCC auction be delayed until the
U.S. District Court for the District of Columbia decides whether the
repossession of the licenses was lawful.
One vehicle for possible instructions that would order a delay of the
December auction could be the must-pass annual spending bill for the
Departments of Labor and Health and Human Services, which is still
pending before Congress.
CEO Hints at WorldCom Split
Speaking about the company's quarterly earnings yesterday, chief
executive Bernie Ebbers said that a future WorldCom would consist of two
businesses, according to a newswire report. One will be
“almost completely focused on digital services,” he said,
with the other concentrated on voice services—namely,
long-distance. WorldCom, based in Clinton, Miss., is the second
telecom company in a week to announced to separate its declining
long-distance business from its other growing operations. Three
months ago Ebbers said that the company would consider restructuring to
isolate the rapidly declining long-distance business from WorldCom's
other operations, all of which are growing. AT&T addressed a
similar problem yesterday by outlining a plan to split into four
companies. Ebbers told analysts that he would outline 'the entire
story' of the company's restructuring at its investors conference Nov.
1.
Judge OKs PageNet Plan, Arch Merger
A judge yesterday approved Paging Network Inc.'s (PageNet)
reorganization plan for emerging from chapter 11 bankruptcy, including a
proposed merger with Arch Wireless Inc., according to a Reuters
report. Judge Gregory Sleet, of the U.S. District Court of
Delaware, said he would confirm the plan after an attorney for Metrocall
Inc. withdrew the company's objection to the plan. Metrocall had
made a rival bid for PageNet, the number one United States messaging
company, hoping to trump the $552 million bid of Arch, the number two
United States paging company.
The Dallas-based PageNet said on Monday that its banks, bondholders
and shareholders had voted in favor of the plan and the merger was
expected to be completed “shortly.” The merger will
include an exchange of Arch common stock for PageNet's senior
subordinated notes and the spin-off to PageNet shareholders and
bondholders of the company's 80.5 percent stake in its Vast Solutions
subsidiary.
Harnischfeger Files Reorganization Plan
Harnischfeger Industries Inc. (HII) yesterday filed a joint plan of
reorganization and disclosure statement in its chapter 11 proceeding in
the U.S. Bankruptcy Court in the District of Delaware, according to a
newswire report. The plan, which covers HII and 57 of its domestic
subsidiaries, reflects a consensual arrangement with both the official
HII and Beloit creditors committees appointed in the proceeding.
If confirmed, the plan generally will provide for full payment to the
creditors of Joy, P&H and most of their subsidiaries and the payment
of unsecured creditors with new HII common stock. Beloit creditors would
receive the net proceeds from the liquidation of Beloit Corp. No
distribution to HII's current shareholders is anticipated by the plan
and all of the existing HII shares will be canceled. The
Milwaukee-based Harnischfeger, a company involved in the manufacture,
service and distribution of equipment for surface mining and underground
mining, expects to emerge from bankruptcy next spring.
Geneva Steel Company Continues Confirmation Hearing
Geneva Steel Company yesterday announced that at the confirmation
hearing on its chapter 11 reorganization plan, the integrated steel mill
requested a continuance of the hearing until Nov. 21, according to a
newswire report. The purpose of the request is to allow the Vineyard,
Utah company additional time to resolve various outstanding issues
regarding its reorganization plan and related financings. There
can be no assurance at this time that the plan proposed by Geneva and
the bondholders' committee will be confirmed by the bankruptcy court
either on the new schedule or at all.
Court Approves AmeriServe Disclosure
Statement
AmeriServe Food Distribution Inc. yesterday announced that the U.S.
Bankruptcy Court in Wilmington, Del., has approved AmeriServe's
disclosure statement in connection with its reorganization plan,
according to a newswire report. The disclosure statement is being
mailed to creditors this week and will also be available as part of the
company's 8-K filing with the Securities and Exchange Commission, as
well as NEBCO EVANS Holding Company's 8-K filing.
AmeriServe, headquartered in Addison, Texas, is one of the nation's
largest distributors specializing in chain restaurants, serving leading
quick service systems such as KFC, Long John Silver's, Pizza Hut and
Taco Bell.
Slowdown Fears, Increased Bankruptcy Filings Lead to Fall in
Credit Card Firm Shares
Shares of credit card and consumer finance firms tumbled yesterday,
beaten down by fears of a slowdown in spending and a respected analyst's
sector-wide downgrade, according to a Reuters report.
Standard & Poor's consumer credit index components, Providian
Financial and Capital One Financial, both fell more than 10 percent on
the New York Stock Exchange. Financial services heavyweight American
Express Co. also fell more than five percent.
The rash of selling came after Kenneth Posner, an analyst with Morgan
Stanley Dean Witter, cut the entire consumer finance sector to market
weight from an overweight. An economic slowdown in the U.S.
economy — predicted by Morgan Stanley's economists — coupled
with new data showing bankruptcy filings running a bit faster than
expected, would hurt the companies, Posner warned. Rising
bankruptcy levels hit consumer finance firms hard, as they make it more
difficult for consumers to keep up with credit card payments.
Flooring America Seeks To Sell Franchise Groups
Flooring America Inc. (FRAE) is seeking to sell certain of its franchise
groups to Carpet Co-op of America Association for $13.3 million, subject
to higher and better offers. Specifically, the floor covering
distribution network operator and franchiser seeks to sell the operating
assets of its Flooring America Franchise Group/Carpet MAX, GCO and
CarpetMAX Canada franchise systems, along with its Everythingdecor.com
Internet operations. The assets to be sold include certain accounts
receivable, tradenames and other intellectual property, and up to $1
million of GCO inventory. The $13.3 million sale price would be subject
to certain adjustments.
Courtesy of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The Daily
Bankruptcy Review Copyright © October 27,
2000.
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