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June 8, 2006
PBGC
Appeals Bankruptcy Court Ruling on Delta, Pilots
The Pension Benefit
Guaranty Corp. (PBGC) has appealed a bankruptcy court decision allowing
Delta Air Lines Inc. to implement a new pilots' contract that saves the
carrier some $280 million a year, according to court documents, Reuters
reported today. The court approved an agreement between Atlanta-based
Delta and its pilots' union last month over objections from the PBGC,
which opposed provisions under the new contract for certain payments to
pilots should their pension plan be terminated. One of the issues on
appeal is whether the court can approve a deal that compensates
employees for losses resulting from the underfunding of their pension
plan, 'when all claims for such underfunding belong exclusively to the
PBGC,' the pension insurer said in a filing in bankruptcy court
in
size='3'>on Wednesday.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/06/08/AR20060…'>Read
more.
face='Times New Roman' size='3'>
id='2'>Delphi
size='3'> Seeks Extension for Reorganization
Filing
Auto parts maker Delphi
Corp. has asked the U.S. Bankruptcy Court to extend until February its
sole right to file a reorganization plan, citing the sheer size and
complexity of its restructuring, Reuters reported yesterday. Delphi,
which has the exclusive right to file a plan through August 5, filed the
request for an extension on Tuesday with the bankruptcy court in
size='3'>New York
needs more time to complete wage and benefit cuts for
w:st='on'>
size='3'>U.S.
size='3'>hourly workers and sweeping plans to drop money-losing or
noncore businesses, it said in court papers. It is seeking approval for
the extension at a hearing on June 16.
href='http://www.nytimes.com/reuters/business/business-autos-delphi.html'>Read
more.
In related
news,
size='3'>talks among General Motors Corp., auto supplier Delphi Corp.
and their unions to restructure
face='Times New Roman' size='3'>Delphi
size='3'>'s blue-collar workforce outside bankruptcy court have made
substantial progress in the past week, the Wall Street Journal
size='3'>reported today. A deal soon could be reached to offer thousands
of
size='3'>Delphi
payments of $70,000 to $140,000 to leave the company and their health
care benefits behind. Delphi and former parent GM are also close to
offering
size='3'>Delphi
early-retirement packages similar to the $35,000 packages offered the
United Auto Workers union in March. A full deal could be done by
September once the final buyout and early-retirement numbers are
clear.
href='http://online.wsj.com/article/SB114972685753674403.html?mod=home_whats_…'>Read
more. (Registration required.)
id='3'>Foamex Trustee Objects to Shareholders
Committee
The U.S. Trustee for
bankrupt foam-cushion manufacturer Foamex International Inc. has
objected to shareholders’ requests to form an official committee
in the wake of recent business improvements that have turned the
company’s stock into a hot commodity, Portfolio Media reported
yesterday. The trustee overseeing the case, Kelly Beaudin Stapleton,
said in a court document filed Tuesday that D.E. Shaw Laminar Portfolios
LLC, which owns a significant amount of Foamex’s common and
preferred stock and had requested the committee, was a
“sophisticated player” that has demonstrated “that it
is very capable of representing its own interests.” Additionally,
Stapleton wrote that an official committee of equity security-holders
would add administrative expense without benefit. The trustee says in
the filing that while the company is improving, the likelihood of a
recovery for shareholders is slim. As of the end of April, Foamex had
$987.5 million in debt it needed to satisfy. A federal judge will decide
whether to approve the committee at a June 15 hearing in the U.S.
Bankruptcy Court in
w:st='on'>
size='3'>Wilmington
w:st='on'>
size='3'>Del.
id='4'>Creditors to Reap Full Payment in Riverstone
Liquidation
In a move sure to please
creditors, bankrupt ethernet provider Riverstone Networks Inc. intends
to file a consensual liquidation plan later this month that will allow
full repayment plus interest to creditors, along with a stockholder
payout, Portfolio
Media reported yesterday. Riverstone's estate,
now known as RNI Wind Down Corp., revealed its intentions earlier this
week while admitting that it is cooperating with an investigation into
the company’s top executives initiated by the
equity-holders’ committee. The investigation, set to begin
immediately, will seek to determine whether any legal basis exists for
bringing claims against the company's directors or officers to recover
funds for its bankruptcy estate. The committee plans to provide the
results of its investigation before the liquidation plan is confirmed in
the U.S. Bankruptcy Court for the District of Delaware in
size='3'>Wilmington
said in a statement.
id='5'>Gordon Brothers and Hilco to Serve as
w:st='on'>
size='3'>London
Liquidators
Gordon Brothers Retail
Partners LLC and Hilco Merchant Resources LLC have won a heated auction
over who will serve as liquidator for the assets of famed rainwear maker
London Fog Group Inc.,
size='3'>Portfolio Media reported yesterday.
Judge Bruce
Markell of the U.S. Bankruptcy Court in
size='3'>Nevada
the deal last week only days after Gordon and Hilco won the bidding at
the May 31 auction. The company's secured lenders, Wachovia Bank N.A.
and DDJ Capital Partners LLC, signed off on the order, which directs the
liquidators to turn over the company's share of the sale proceeds
directly to Wachovia Bank until the bank is paid in full. The terms of
the winning bid remain confidential, but the proposal trumped that of
the Hudson Capital Partners LLC and Ross Stores Inc. joint venture,
originally considered to be the lead or stalking-horse bidder in the
auction.
id='6'>Bankruptcy Filings in
w:st='on'>
size='3'>Utah
426 in May
Utah bankruptcy filings
in May fell to 426 compared with 1,688 during May 2005, according to the
U.S. Bankruptcy Court for the District of Utah, the
face='Times New Roman' size='3'>Salt Lake City Desert News
reported today. Filings from Jan. 1 through May 31 of
this year decreased by 78 percent compared with the same five-month
period last year. The U.S. Bankruptcy Court for the District of Utah was
among five districts in the nation showing the highest percentage
decrease in total filings for the 12-month period ending March 31.
Filings in
face='Times New Roman' size='3'>Utah
during that period fell 12.05 percent.
id='7'>Pension Bill Provision May Help Insurers Recover Medical
Costs
As congressional
negotiators try to hammer out a compromise pension bill, some lawmakers
and employee advocates say one provision could make it easier for
employers and health insurers to gain a share of money that workers win
in personal injury suits, the
size='3'>Wall Street Journal reported today.
The House and Senate passed different versions of the pension
legislation last year, and are negotiating to reconcile them, in a
process expected to continue for weeks. The Senate bill doesn't include
a similar provision on benefit-plan recoveries. A provision in the House
bill, critics say, could undermine some worker protections and broaden
insurers' rights to recover expenses. The bill would let insurers step
ahead of injured employees when it comes to divvying up a legal
settlement or judgment. In a worst-case scenario, the proposed change
could leave some accident victims without any of the money they received
in court, critics say.
href='http://online.wsj.com/article/SB114973506917874600.html?mod=hps_us_at_g…'>Read
more.
id='8'>'Cloud of Liability' Over Pension Benefit Guaranty
Corp.
As the country
transitions away from annuity-type retirement plans to
employee-controlled 401(k) investment options, the nation's safety net
for employer-funded pension plans provided by the Pension Benefit
Guaranty Corp.(PBGC) is starting to tear, the
size='3'>West Virginia State
Journal reported today. As more companies make
the switch to defined contribution plans, that means fewer premium
dollars flowing into the already underfunded PBGC. 'There is a cloud of
liability hanging over the PBGC's head, and I'm not sure how it's going
to be funded,' said Michelle Wittekind, pension administrator for the
Employee Benefits Group at Jackson Kelly in
w:st='on'>
size='3'>Charleston
w:st='on'>W
Va.
the PBGC protects the pensions of 44.1 million American workers and
retirees in 30,330 private single-employer and multi-employer defined
benefit pension plans. The number of Fortune
100 companies offering pensions in 2005 has dropped to 37, down from
nearly 90 in 1985. The number of companies offering only 401(k) plans
rose from 10 to 36 in the same time period.
href='http://www.statejournal.com/story.cfm?func=viewstory&storyid=11462&cati…'>Read
more.
International
id='9'>Brazilian Airline Varig Lands on Auction
Block
Varig, Brazil's flagship
carrier, will land on the auction block to avoid bankruptcy, pricing its
fleet and international and domestic routes at a minimum bid of $860
million, Agence France-Presse reported yesterday. The airline is saddled
with debt of more than $3 billion. Sixty-five percent of the debt is
owed to public services like airports authority Infraero and fuel
distributor BR Distribuidor. Varig's creditors had approved an auction
scheduled for July 9, but the sale was moved up due to the company's
dwindling finances. Judge
Luiz Roberto Ayub, who is overseeing Varig's restructuring, said Monday
that a buyer would not inherit the airline's tax or labor debts in order
to 'to make the sale more attractive.'
href='http://news.yahoo.com/s/afp/20060607/bs_afp/brazilaviationcompany_06060…-'>Read
more.
href='http://news.yahoo.com/s/afp/20060607/bs_afp/brazilaviationcompany_06060…-'>