March 62007

 

Subprime
Lenders

name='1'>Analysts Warn New Century Financial May Be Close to
Bankruptcy

Several analysts agreed Monday
that New Century Financial Corp., one of the nation's largest subprime
mortgage lenders, likely faces liquidation or bankruptcy following
revelations that it's under criminal investigation and in violation of
debt covenants with several lenders, MarketWatch.com reported yesterday.

'New Century is more likely to enter the death spiral we had feared, as
filing delays, financial difficulties, likely restricted liquidity and
regulatory/criminal investigations could conspire to limit its options
outside of bankruptcy,' Merrill Lynch analysts wrote early Monday. As
troubles continue to roil the market for subprime mortgages, New Century

disclosed late Friday that it's in default with several lenders and

that federal regulators have begun an investigation. New Century's
shares were down more than 69 percent at $4.53 in afternoon trades
Monday, after dropping in Friday's session as well. 

href='http://www.marketwatch.com/news/story/story.aspx?guid=%7BCC3F81FC%2D1BDE%2D4410%2D8B0D%2D0E4210E07C52%7D&dist=rss'>Read

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name='2'>Investigated Subprime Lender Puts Workers on
Leave

The Fremont General
Corporation, the financial services holding company, put some of its
residential loan staff on paid leave yesterday “pending further
information” and said that it would stop offering subprime
mortgages, Bloomberg News reported today. Fremont General said that many

workers had been sent home as its managers and operations people
“are continuing to work today and are making certain that our
business data is secure and our customers are taken care of.”
Fremont, whose operations in Santa Monica, Calif., include a federally
insured banking unit, announced Friday that it would sell its subprime
lending business after it had agreed to restrict its activities in that
area. “The regulators did not seek any changes in the
company’s retail deposit-gathering business,” said

size='3'>Fremont’s
statement, adding that the company would still offer commercial real
estate loans. 

href='http://www.nytimes.com/2007/03/06/business/06lend.html?pagewanted=print'>Read

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name='3'>Private Lenders Prepare to
w:st='on'>
size='3'>Battle Against
Threats to Student Loan Subsidies

Banks and other private
student loan providers are gearing up for battles on several legislative

fronts, including a fight against a possible congressional overhaul of a

major loan program that would force companies to compete for
business,
size='3'>CongressDaily reported today. Already

reeling from the Bush administration's FY08 budget proposal last month,
which cuts lender subsidies by $11.2 billion to pay for a Pell Grant
increase, private companies are also facing a threat from Senate Health,

Education, Labor and Pensions Chairman Edward Kennedy (D-Mass.), who
might offer legislation to require them to compete in a bidding process
for $47 billion in Federal Family Education Loans they offer each year.
By forcing companies to bid to provide the 13.6 million FFEL loans, the
government would no longer have to entice lenders by offering subsidies,

which totaled $17 billion last year, proponents of this system say.
Instead, lenders would try to propose the most attractive financial
package to the government by offering lower interest rates and smaller
fees, in the hopes of being awarded student loan contracts. However, the

Consumer Bankers Association said that lenders already compete with each

other to offer student loans and that banks have to offer the best
service possible to win universities over.

Airlines

name='4'>Delta Seeks Extension for Reorganization
Plan

Delta Air Lines Inc., which is
operating under bankruptcy protection, asked for a bankruptcy court for
permission to delay the deadline by which the company has to exclusively

file its reorganization plan and to solicit for creditor acceptance of
the plan, the Associated Press reported yesterday. The Atlanta-based
airline said its fourth extension request is necessary because a
confirmation hearing on its chapter 11 plan is scheduled for April 25,
after the current deadline of April 16. Delta is asking for an extension

to June 1 to file its plan. 
href='http://biz.yahoo.com/ap/070305/delta_bankruptcy.html?.v=1'>Read
more.

name='5'>Northwest Seeks to Have Flight Attendants Motion
Dismissed

Northwest Airlines Corp.
asked a bankruptcy court to reject the Association of Flight
Attendants’ motion seeking to overturn pay and benefit cuts
Northwest imposed after the bankrupt airline received approval to void
its collective bargaining agreements,

size='3'>Bankruptcy Law360 reported yesterday.

The flight attendants say they’ve had to endure steep pay and
benefit cuts since the court gave Northwest permission to toss its
collective bargaining deals. However, those concessions weren’t
really necessary, the union says, because Northwest’s financial
situation isn’t that dire. Northwest’s opposition papers,
however, regard the motion as an attempt to circumvent the law and as a
ploy to complicate the confirmation process for Northwest's
reorganization plan, which has already been filed. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=19810'>Read

more. (Registration required.)

Autos

name='6'>DaimlerChrysler CEO to Consider 'All Options' for
Chrysler

DaimlerChrysler AG Chief
Executive Dieter Zetsche said his willingness to consider selling the
auto giant's Chrysler division isn't the result of pressure from
shareholders or from his company's supervisory board, but rather 'a
proactive development, not a reactive development,' the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Zetsche added that the efforts stemmed from an
effort by top management to 'refining and revisiting the strategy of
all' the divisions. The move to explore a sale of Chrysler comes
amid rising investor frustration over the division's huge losses in
recent months. Zetsche said that in deciding whether to open the door to

a possible sale of Chrysler, the company was also influenced by the
refusal of the United Auto Workers to grant the company health care
concessions similar to those that the union has granted to rivals Ford
Motor Co. and General Motors Corp. 

href='http://online.wsj.com/article/SB117317585300228143.html?mod=home_whats_news_us'>Read

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In related news, the
leader of the Canadian Auto Workers warned against private-equity
control of Chrysler, calling it the 'worst-case scenario' for the
automaker and a prelude to plant closures and worker layoffs, the

Washington Post
reported today. Hargrove's comments come as
private-equity firms are poring over Chrysler's internal financial
documents. Blackstone Group and Cerberus Capital Management are among
the firms assessing what it would take to acquire Chrysler. It was not
clear how other big unions at DaimlerChrysler regard the prospect of
private-equity ownership of Chrysler. Ron Gettelfinger, president of the

United Auto Workers, has not spoken publicly about the implications as
he is seeking an active role in the division's fate as a member of the
German company's supervisory board. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2007/03/05/AR2007030501411.html'>Read

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name='7'>Dana Responds to Retirees Objection over
Benefits

Bankrupt auto parts maker

Dana Corp. has claimed that moves by a group of retirees to block a
motion to terminate non-pension benefits threatens to derail the
company’s bid to emerge from chapter 11,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Dana said that under the Employee
Retirement Income Security Act, the company could freely modify or
terminate welfare benefits at any time. It added that the retirees had
not demonstrated that the company had promised benefits for the life of
the beneficiary and could therefore not prove the plans were
vested. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=19774'>Read

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w:st='on'>
name='8'>Texas
w:st='on'>
size='3'> Church
face='Times New Roman' size='3'> Files for Bankruptcy
Protection

Agape Christian
Fellowship filed for bankruptcy protection Monday, the
face='Times New Roman' size='3'>Dallas Morning News
size='3'>reported today. The church founded by Terry Hornbuckle, who was

convicted last year of raping three women, is facing three lawsuits in
state court and one in federal court. Bankruptcy lawyer
size='3'>Davor Rukavina said that the filing was
needed to consolidate all the costly litigation into one place. Details
of the church's financial situation were not immediately available.
Three women who have accused Hornbuckle of rape filed lawsuits in state
court. Two former employees who were fired have filed lawsuits in state
and federal court. Additionally, the city of
w:st='on'>
size='3'>Arlington and

size='3'>Tarrant
face='Times New Roman'
size='3'>County also
filed lawsuits in December against the church for failing to pay tax on
vacant land next to the church building. That lawsuit said Agape owed
more than $20,000 in back taxes and penalties from 2005. 

href='http://www.dallasnews.com/sharedcontent/dws/news/localnews/stories/030607dnmetagape.21ab5fd0.html'>Read

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name='9'>Granite Broadcasting Files Amended Reorganization
Plan

Bankrupt media company
Granite Broadcasting Corp. has filed its first reorganization plan and
its related disclosure statement, which provide a valuation for the
company of more than $500 million,

size='3'>Bankruptcy Law360 reported yesterday.

The amended joint plan was filed on March 2 by Akin, Gump, Strauss,
Hauer & Feld LLP, which is representing Granite in its chapter 11
case. The court approved the disclosure statement and scheduled a
hearing to consider confirming the plan for April 16. The disclosure
statement included a valuation range of between $463 and $523 million
for Granite and its subsidiaries. The case is
face='Times New Roman' size='3'>Granite Broadcasting
Corporation, case number 06-12984, in the U.S.

Bankruptcy Court for the Southern District of New York. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=19779'>Read

more. (Registration required.)

name='10'>Michael Jordan Allowed to Proceed with WorldCom
Claim

A federal bankruptcy
court judge in
face='Times New Roman' size='3'>New York
last month ruled that attorneys for former NBA star
Michael Jordan could proceed with their $8 million claim against
WorldCom for the unpaid portion of a 10-year endorsement agreement,
the Washington
Post reported yesterday. The former player and

part-owner of the Washington Wizards signed a $25 million deal with
WorldCom in 1995, including a $5 million signing bonus, for the right to

use his likeness in ads. He last appeared on the air for WorldCom in
2001. The company dumped its star in 2003 and refused to pay the balance

of his contract, arguing that
w:st='on'>
size='3'>Jordan
size='3'>was an employee of the company and was not entitled to recover
his salary through the bankruptcy process. His lawyers said

size='3'>Jordan
size='3'>gave WorldCom a license to use his likeness, which the company
used until it filed for bankruptcy protection. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2007/03/04/AR2007030401193_pf.html'>Read

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name='11'>Ex-Worldcom CEO Ebbers Loses Appeal

The Supreme Court said
Monday that it rejected an appeal by former WorldCom Inc. Chief
Executive Bernard Ebbers, who was convicted of orchestrating an $11
billion accounting fraud that led to the largest
w:st='on'>
size='3'>U.S.
size='3'>bankruptcy, Reuters reported yesterday.
face='Times New Roman' size='3'>Ebbers was convicted by a federal jury
in 2005 in New York on nine counts of conspiracy, securities fraud and
other crimes that led to the telephone company's bankruptcy in July of
2002. He was sentenced to 25 years in prison. In appealing to the high
court, attorneys for Ebbers argued that the trial judge should have
required the government to grant immunity to several prospective defense

witnesses. They also argued that the trial judge wrongly instructed the
jury that it could convict Ebbers on the basis that he engaged in
'conscious avoidance' of the fraud at WorldCom. 

href='http://money.cnn.com/2007/03/05/news/newsmakers/bc.usa.ebbers.crime.reut/index.htm?section=money_latest'>Read

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href='http://money.cnn.com/2007/03/05/news/newsmakers/bc.usa.ebbers.crime.reut/index.htm?section=money_latest'>