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November 29,
2006
Judge Upholds
Policyholders’ Katrina Flood Claims
A federal judge offered
hope to the tens of thousands of people whose homes and businesses
in
Orleans
Hurricane Katrina by ruling that insurance companies should pay for the
widespread water damage, the
size='3'>New York Times reported today. If
upheld, the ruling late Monday by Judge Stanwood R. Duval Jr. of
in
face='Times New Roman' size='3'>New
Orleans
insurers billions of dollars more than the $41 billion they have already
paid to storm victims. However, the insurers insist that their policies
do not cover flooding and said yesterday that they expected an appeals
court to reverse the decision.
href='http://www.nytimes.com/2006/11/29/business/29insure.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
Airlines
Airways Expected to Present Merger Offer for Delta This
Week
US Airways will formally
present its $8 billion merger offer for Delta Air Lines to Delta and its
official unsecured creditors’ committee sometime this week,
the New York
Times reported today. The meeting will be the
first time the two airlines have met to discuss the bid since US Airways
announced its offer on Nov. 15.
size='3'>Delta’s chief executive, Gerald Grinstein, has said that
Delta would prefer to emerge from bankruptcy proceedings as a
stand-alone carrier. In a statement responding to US Airways’
offer, he repeated that Delta has the exclusive right to submit a
reorganization plan until Feb. 15. A Delta spokeswoman said yesterday
that the airline planned to present its official restructuring plan
toward the end of next month.
href='http://www.nytimes.com/2006/11/29/business/29delta.html?pagewanted=print'>Read
more.
name='3'>Northwest Flight Attendants Look for Right to
Strike
Flight attendants at
bankrupt Northwest Airlines Corp. asked a federal appeals court on
Tuesday to overturn a lower court’s preliminary injunction that
bars them from striking while they are in contract mediation
talks, Bankruptcy
Law360 reported yesterday. In oral arguments
before a three-judge panel of the Second Circuit Court of Appeals, an
attorney for the Association of Flight Attendants said the workers
should be able to strike because the airline terminated their labor
contract. However, Northwest attorney Brian Leitch argued that a strike
should be barred because union and management are in mandatory mediation
under the jurisdiction of the National Mediation Board. The federal
Railway Labor Act does not allow strikes during mediations. The law
imposes strike restrictions to prevent disruptions to the country's
transportation system, Leitch argued.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=14178'>Read
more. (Registration required.)
name='4'>Solutia Plan Draws Objection From Labor
Deptartment
The U.S. Department of
Labor (DOL) has filed an objection to bankrupt chemical products maker
Solutia Inc.’s proposed reorganization plan, claiming it might
violate the Employee Retirement Income Security Act (ERISA),
Bankruptcy Law360
reported yesterday. According to the objection filed
Monday by Secretary of Labor Elaine Chao, Solutia’s chapter 11
plan contains language that either violates or could be construed to
violate ERISA. The objection urges the court not to confirm the plan if
the debtors don’t amend it to address the DOL’s concerns.
DOL has been investigating the Solutia Inc. Savings and Investment Plan
for ERISA violations, and filed a proof of claim in June based on the
possibility that breaches of ERISA might give rise to claims against the
plan’s fiduciaries, according to the objection.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=14162'>Read
more. (Registration required.)
name='5'>Calpine Requests More Time for Exclusivity
Power generator Calpine
Corp. wants its exclusivity period to file a reorganization plan
extended for at least six more months, though it acknowledged that it
might not make that deadline either, Bankruptcy Law360
reported yesterday. In papers filed last Wednesday with
the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
said the complexity of the case – which involves 274 debtors and
$18 billion of funded debt – warrants an extension of the
exclusivity date. If the motion is approved, the company’s
exclusive right to file a reorganization plan will run out on June 20
with creditor support due Aug. 2007. As it stands now, Calpine’s
exclusivity period ends Dec. 31 with creditor support due March
31.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=14143'>Read
more. (Registration required.)
Health to Settle Class Action for $2.7 Million
Shareholders who
purchased World Health Alternatives Inc.’s stock between Aug. 17,
2004 and Aug. 19, 2005 would be eligible for a $2.7 million gift
settlement, which would be paid by the company’s insurance
companies, Bankruptcy
Law360 reported yesterday. Investors filed
several suits against the company in 2005 after World Health disclosed
financial irregularities that led to the exposure of an accounting fraud
scheme at the company. The suits were eventually consolidated into a
single class action, which alleged, among other claims, that World
Health cofounder Richard McDonald unjustly enriched himself at the
expense of shareholders and abused his position as CEO. McDonald and
other World Heath executives allegedly misrepresented the true financial
condition of the company by disguising $4 million in underpaid tax
liabilities, garnering $6.5 million in excess funding through lending
agreements based on false statements, and misrecording convertible
debenture and warrant agreements.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=14136'>Read
more. (Registration required.)
Florida
Community HospitalSold
for $2.4 Million in Bankruptcy Court
face='Times New Roman' size='3'>South
size='3'>Beach
w:st='on'>
size='3'>Fla.
w:st='on'>
size='3'>Community
face='Times New Roman' size='3'>Hospital
size='3'>was sold in bankruptcy court yesterday for $2.4 million to
surgeon David Galbut and
w:st='on'>New
York
Richard Kresch, the
size='3'>Miami Herald reported today. Galbut
and Kresch must apply to the state for a transfer of the operating
license so that they can reopen the hospital, which has been closed for
almost nine months. They have 90 days to close the deal. No other group
expressed interest in bidding, said Alan Goldberg
size='3'>, appointed as trustee by the bankruptcy court. At present, the
only operating hospital in
size='3'>is
size='3'>Mount Sinai
occupancy rate of 45 percent in the latest state report in 2004.
href='http://www.miami.com/mld/miamiherald/business/16117958.htm?source=rss&channel=miamiherald_business'>Read
more.
name='8'>Commentary: Reorganizing
w:st='on'>
York’s Health Care
System
While the New York
Commission on Health Care Facilities has the tough task of reforming and
reorganizing one of the most expensive and inefficient health care
systems in the country, it has come up with a bold and intelligent set
of recommendations, according to a New York Times
editorial today. The commission is calling for the
closing of nine hospitals, the restructuring of 48 other institutions
through downsizing, mergers and other shifts intended to end duplication
and offer a more complete range of health care for more people. The
commission has taken the right step to emphasize the concerns of
patients while trying to make basic health care facilities more
available to give better and less costly care to those who now go to
emergency rooms instead.
href='http://www.nytimes.com/2006/11/29/opinion/29wed2.html?pagewanted=print'>Read
more.
International
name='9'>Eurotunnel Restructure Plan Gains Backers
Eurotunnel, the operator
of the undersea rail tunnel linking
w:st='on'>
size='3'>Britain
size='3'>France
stepped back from the brink of insolvency as main creditors and
suppliers approved a restructuring plan to cut its debt of £6.2
billion ($12 billion), the
size='3'>Wall Street Journal reported today.
The votes by the suppliers and by holders of Eurotunnel's original bank
debt, which accounts for about two-thirds of the total, came a day after
the company said it had received two competing offers to finance the
rescue plan. Eurotunnel bondholders still have to approve the deal
before the restructuring can go ahead. They are to vote by
mid-December.
href='http://online.wsj.com/article/SB116464674235733578-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>Read
more. (Registration required.)
name='10'>Credit Managers Daily Business News
Report
The following articles
are taken from the Daily Summary of Troubled & Fast Growing U.S.
Companies published by Bastien Financial Publications.
For more of the latest business news visit
http://dailybusiness.creditmanagers.biz. 
ABI Members receive a 50
percent discount when subscribing to the complete Daily Summary. Enter
“ABI Member” in the comments section when you fill out the
subscriber form.
size='3'>Bally Total Fitness Holdings Corp.,
the Chicago, Ill.-based operator of health clubs, said that it will pay
more than $750,000 in back wages to more than 3,200 workers following
incorrectly computed overtime pay.
size='3'>BearingPoint, the McLean,
size='3'>Va.
firm, filed its audited 2005 financial statement, including a loss for
the year of nearly $722 million. That
follows a $546 million loss in the year earlier.
size='3'> Revenue in 2005 increased
slightly--to nearly $3.4 billion. The recent results included a number
of extra items, including a $113 million loss on a contract in
size='3'>Hawaii
company said that it's now moving quickly to get its financial filings
up to date.
size='3'>Blair Corp., a
w:st='on'>
size='3'>Warren
w:st='on'>
size='3'>Pa.
seller of apparel, reported a third quarter net loss of more than $1.1
million. Sales were down 9%--to $89.5
million.
size='3'>Digital Angel Corp., a
Minnesota-based maker of sensors and IDs, said that its board will work
to reduce expenses and improve its performance in an effort to return to
profitability next year. Digital Angel had
earlier been considering a number of other options, including a
recapitalization as well as a merger or sale of the
company.
size='3'>Ford Motor Co. is betting that by
taking advantage of the booming debt market and arranging for $18
billion in new borrowings it will be better able to fund its drastic
restructuring. The
w:st='on'>
size='3'>Dearborn
carmaker is pledging nearly all of its automotive assets and certain
parts of its Volvo and finance units as collateral for the money, which
includes $15 billion in secured loans and the issuance of $3 billion in
unsecured financing, including notes that could later be converted to
common stock. While the financing
arrangement gives the beleaguered manufacturer additional time, there is
still no guarantee that Ford's turnaround will succeed in the long
run.
size='3'>Global Crossing Ltd., the Florham
Park, N.J. fiberoptic-network operator, reported a third quarter net
loss of $50 million, including an operating loss of $50
million. Revenue slipped 3%--to $466
million.
size='3'>John B. Sanfilippo & Son Inc., an
Elk Grove Village,
w:st='on'>
size='3'>Ill.
nuts and candies, will stop buying almonds directly from growers and
discontinue its almond-handling business in Gustine, Ca.
The move is part of a plan to reduce certain commodity
risks and labor costs.