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August 5, 2005
U.S. Job Growth Unexpectedly Strong in July
U.S. job growth picked up last month as employers added 207,000
workers to their payrolls, a healthy gain that outstripped Wall Street
expectations, a government report showed today, Reuters reported. The
unemployment rate held steady at the 2 ¾–year low of 5
percent reached in June, the Labor Department said. While some
economists had thought the report might be skewed by Hurricane Dennis,
which battered the Florida panhandle in mid-July, the department said
the storm appeared to have no discernible impact on the data. Overall,
the report was a bit stronger than Wall Street analysts had expected.
Economists had forecast a job gain of 183,000 with the jobless rate
steady.
Bankruptcy Judge Approves Payments to Lawyers, Consultants
Thursday was a multimillion-dollar payday for the attorneys and
consultants working for the past five months to reorganize bankrupt
Winn-Dixie, the Miami Herald reported yesterday. U.S.
Bankruptcy
href='http://www.miami.com/mld/miamiherald/business/national/12304320.htm'>Judge
Jerry Funk approved fees and expenses totaling about $15 million,
but only after he approved a motion filed by Wachovia Bank,
Winn-Dixie’s major lender, to hire a fee examiner. The fees paid
were for interim services and will be subject to review by the fee
examiner, who will be hired by Winn-Dixie Stores Inc. with the blessing
of the creditors’ committee and the U.S. Trustee.
href='http://www.miami.com/mld/miamiherald/business/national/12304320.htm'>Read
the full story.
New Bankruptcy Reform May Change Attorneys’ Caseloads
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
will become law on October 17 in the face of rising bankruptcy filings,
Accountingweb.com reported today. The Act’s new certification
requirements and debtor-means tests means that some attorneys are
considering not taking these specialized cases after it goes into
effect, according to the web portal. Even now,
href='http://www.accountingweb.com/cgi-bin/item.cgi?id=101167'>consumers
may have trouble finding an attorney for their cases. At issue is a
detail of the new law that could potentially dissuade bankruptcy
attorneys from “pro bono” or reduced fee work. By law, they
will be required to personally assure the accuracy of information
contained in the petition they will be filing on behalf of a client.
href='http://www.accountingweb.com/cgi-bin/item.cgi?id=101167'>Read the
full story.
Delphi Aims to Avoid Bankruptcy
Automotive supplier Delphi Corp. is in discussions with former parent
General Motors Corp. and the United Auto Workers about a restructuring
of its unprofitable U.S. operations aimed at avoiding bankruptcy
reorganization, the Wall Street Journal reported today.
Delphi Chairman and Chief Executive Robert Miller said the talks are
constructive and give him hope that the company can restructure out of
court. Miller said that because of substantial losses, the company
cannot continue on its present course to the expiry of its current UAW
contract in September 2007.
Northwest, Delta Fuel Confidence
Both airlines, battling day by day to stay out of bankruptcy, are
href='http://www.marketwatch.com/news/story.asp?dist=¶m=archive&siteid=mk…'>keeping
planes full during peak season—albeit at a tremendous cost as
fuel prices remain at record levels while stiff competition keeps a lid
on airfares, Marketwatch reported on Wednesday. This summer is shaping
up to be the busiest since the Sept. 11, 2001, attacks as cheap tickets
and confident travelers flock to the skies. Legacy and low-cost carriers
alike are trying to figure out how to make money with jet-fuel prices
still at lofty levels and historically low airfares. The season becomes
even more urgent when a bleak winter of weaker demand is factored in.
href='http://www.marketwatch.com/news/story.asp?dist=¶m=archive&siteid=mk…'>Read
the full article.
Pair of WorldCom Ex-officials who Aided Case May Avoid Jail
The two lowest-ranking former WorldCom officials who pleaded guilty
to participating in the telecom company’s $11 billion accounting
fraud are likely to get sharply reduced sentences and may avoid jail
altogether when they are sentenced in federal court in Manhattan today,
the Wall Street Journal reported today. Betty Vinson and
Troy Normand were the managers in WorldCom’s accounting department
who executed the changes to the books orchestrated by their superiors.
Each has pleaded guilty to one count of conspiracy and one count of
fraud and each faces as many as 15 years in jail, according to attorneys
not involved in the case. Both of them “contributed materially to
the successful prosecution of Ebbers,” prosecutor David Anders
wrote in letters to the judge. In their testimony at the trial, the
accountants said they hoped to avoid prison.
Pricewaterhouse Ordered to Pay $120 Million in Suit
A federal jury ordered PricewaterhouseCoopers LLP to pay $120 million
in connection with its audits for the long-defunct Ambassador Insurance
Co., one of the largest jury verdicts against an accounting firm, the
Wall Street Journal reported today. The decision, reached
last week after a 10-week trial, comes two decades after the insurer
filed for bankruptcy—offering a reminder of how deep the major
accounting firms’ malpractice-litigation caseloads remain.
Time to Clean House (Houston Chronicle Commentary)
If a Washington Post prediction pans out,
href='http://www.chron.com/cs/CDA/ssistory.mpl/business/3293836'>by the
end of next month, four of the eight biggest airlines will be in
bankruptcy, an industry first. The value of the management that has
brought the industry to this point is, at best, dubious. What are needed
aren’t retention bonuses. What’s needed is a large broom to
sweep out failed leadership and bring in new ideas.
href='http://www.chron.com/cs/CDA/ssistory.mpl/business/3293836'>Read
the full commentary.
Amcast Successfully Reorganizes
Amcast Industrial
Corporation announced yesterday that it has successfully emerged from
chapter 11 bankruptcy protection, Yahoo! Business Wire reported.
Amcast filed for chapter 11 on Nov. 30, 2004, in Dayton, Ohio, and
subsequently filed a plan of reorganization and disclosure statement.
The company’s secured and unsecured creditors overwhelmingly voted
in favor of the plan, and it was confirmed on July 29, 2005. Under the
terms of the plan, Amcast’s pre-petition senior lenders put in
place a long-term capital structure by exchanging their former holdings
of Amcast senior secured debt for $13 million in senior secured debt and
$51 million in secured subordinated debt, with the remainder in equity.
As a consequence, these institutions now own all of the company’s
common stock and equity.
href='http://biz.yahoo.com/bw/050804/45644.html'>Read the full
story.
Federal-Mogul CEO Sees Chapter 11 Exit in a Few Months
The chief executive of auto supplier Federal-Mogul Corp. Wednesday
said the company should be able to emerge from bankruptcy—in the
United States or Britain, or both—in a matter of months, the
Associated Press reported Wednesday. At a meeting of auto industry
executives in northern Michigan, Jose Maria Alapont said
Federal-Mogul’s troubles are a little different than those at some
competitors that are teetering on the verge of chapter 11.
Federal-Mogul’s downfall was asbestos liability, rather than the
weak U.S. auto industry. Still, he said, “Even if you’re one
of our competitors, I would advise you to stay out of chapter 11.
It’s very expensive.“ The company sought bankruptcy
protection in 2001. Alapont was named president and CEO of the company
in February, with the court presiding over the Southfield
company’s chapter 11 proceedings authorizing the hiring. In June,
he also took on the chairman post. Last week, Federal-Mogul said its
second-quarter loss widened amid escalating raw material and pension
costs, although its sales rose 6 percent. The company also said it is
working to mitigate the effects of the higher costs.
Stelco’s Second-quarter Profit Dips to $40 Million
Steelmaker Stelco Inc., still operating under bankruptcy-court
protection, says
href='http://canadaeast.com/apps/pbcs.dll/article?AID=/20050804/CPB/11052014'>its
second-quarter profit dipped to $40 million from a year-earlier $42
million even as one-time items boosted the bottom line,
breakingbusinessnews.com reported Thursday. One-time items included a
$20-million gain on the sale of the firm’s plate mill assets, $14
million for the rest of an insurance claim recovery related to a 2004
blast furnace outage, a $4-million gain on the sale of the
company’s interest in Camrose Pipe and a $4-million gain from
selling the Welland Pipe U and O pipe mill. But earnings were hurt by
decreased shipments and higher costs.
href='http://canadaeast.com/apps/pbcs.dll/article?AID=/20050804/CPB/11052014'>Read
the full story.
3rd Circuit Ruling Eases Bankruptcy Trustee Suits Against Corporate
Officers
In an era rife with corporate scandals, a decision this week by the
3rd U.S. Circuit Court of Appeals is likely to stir up the atmosphere in
board rooms and executive offices nationwide by making it significantly
easier for bankruptcy trustees to file suit against corporate directors
and officers for alleged breaches of their fiduciary duties, the
Legal Intelligencer reported today.
href='http://www.law.com/servlet/ContentServer?pagename=OpenMarket/Xcelerate/…'>In
Stanziale v. Nachtomi, a unanimous three-judge panel
revived a suit against the former officers and directors of the defunct
charter airline Tower Air Inc., in which the trustee claims they
drove the company into insolvency by indifference and egregious
decision-making. The appellate panel concluded that U.S. District Judge
Kent A. Jordan of the District of Delaware erred by applying
Delaware’s stricter Chancery Rule 8 pleading standard and instead
should have applied the more lenient federal “notice
pleading” standard.
href='http://www.law.com/servlet/ContentServer?pagename=OpenMarket/Xcelerate/…'>Read
the full story.