April 02, 2004
House To Vote On Pension
Bill Today, Senate Uncertain
The House will vote today on the pension bill conference report, a
measure expected to pass that chamber but encounter stiff Democratic
resistance in the Senate, CongressDaily reported. Although
the House passed the original bill by an overwhelming 397-2 margin,
today's final passage vote might turn more partisan, according to the
newswire. Two of the three House Democratic conferees -- House
Education and the Workforce ranking member George Miller (D-Calif.) and
Rep. Robert Andrews (D-N.J.) -- voted for the House bill but against the
conference report. The third, Ways and Means ranking member Charles
Rangel (D-N.Y.), did not vote for or against the House bill, but opposed
the conference report.
In conference, negotiators
added some Senate-passed provisions helping multi-employer pension
plans, but the aid provided was much less than Democrats had hoped for,
reported CongressDaily. The underlying bill would reset the
formula companies use to calculate the contributions they must make to
their pension coffers. The change would save companies an estimated $80
billion over two years. Democrats are hoping to block the measure when
it comes up for a Senate vote next week, contending the multi-employer
provisions fall short of what is needed. A spokesman for Senate Health,
Education, Labor and Pensions ranking member Edward Kennedy (D-Mass.)
said Kennedy expects Democrats will 'stand together,' despite fierce
lobbying from businesses that want relief from pension
payments.
Bill backers had hoped
that each chamber would pass the bill before adjourning for the spring
recess, in time for the April 15 deadline that many companies face for
making their first pension payments of the year. Without relief by April
15, supporters say some businesses will be forced to freeze or
discontinue their pension plans.
w:st='on'>
w:st='on'>U.S.Job Growth
Soars
w:st='on'>U.S. payrolls grew at
the fastest pace in nearly four years in March, the government said
Friday, in a report that soared past Wall Street expectations and could
play a pivotal role in the presidential election, CNN reported. Payrolls
outside the farm sector grew by 308,000 jobs in March, the Labor
Department reported, compared with a revised gain of 46,000 in February.
The unemployment rate rose to 5.7 percent from 5.6 percent. Economists,
on average, had expected 123,000 new jobs and unemployment at 5.6
percent, according to Briefing.com, CNN reported. In its report, the
department said service industries such as education and health care
added 230,000 jobs in March. Goods-producing industries added 78,000
jobs, including 71,000 new construction jobs.
size='3'>Manufacturing Continues to Surge
The Institute for Supply Management reported that the manufacturing
sector accelerated in March, and manufacturers’ hiring activity
hit a 16-year high, the Wall Street Journal reported. The
Institute’s index of manufacturing activity rose to 62.5 in March
from 61.4 in February. Any reading above 50 indicates an expanding
factory sector, the newspaper reported. The report indicated that in
recent months the readings have been the strongest in 20 years and have
historically corresponded to annual economic growth of more than 6
percent, the Journal reported. The Institute reported that the
strength was broad-based, with 19 of 20 industries surveyed reporting
increased production and new orders.
OCC Chief Defends
National Bank Pre-emption Regulations
Comptroller of the
Currency John Hawke defended today a controversial new rule exempting
national banks from many state consumer protection laws, telling members
of the House Financial Services Committee during an oversight hearing
(
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face='Times New Roman' size='3'>) that the pre-emption rule 'materially
strengthens' his office's ability to fight predatory lending,
CongressDaily reported. 'But Financial Services ranking
member Barney Frank (D-Mass.) called the rule an unprecedented
expansion of federal pre-emption authority that could induce many
state-chartered banks to become national banks, thereby leaving their
customers with weaker protections against predatory lending.
The OCC pre-emption rule,
which took effect in February, exempts national banks from most of the
state laws from which nationally chartered thrift institutions already
are exempt under Office of Thrift Supervision rules. The rule also
would establish new federal anti-predatory lending standards for
national banks and restrict state agencies' authority to take actions
against those banks, the newswire reported. Financial Services
Chairman Michael Oxley (R-Ohio) disagreed with state
officials' concerns that the OCC rule undermined the 140-year-old
dual-charter banking system. 'I simply cannot agree with my friends in
the states that subjecting national banks to a patchwork of inconsistent
standards set by state legislatures and local municipalities is either
required by the dual banking system or in the best interests of the
customers of those institutions,' Oxley said,
CongressDaily reported.
Banking Committee Passes GSE
Regulation Bill On Party Lines
Efforts to tighten the regulatory oversight of mortgage giants Fannie
Mae and Freddie Mac dissolved Thursday in a partisan meltdown, as the
Senate Banking Committee voted along party lines to adopt a bill that
appears to stand little chance of going any further, according to
CongressDaily. Earlier in the day, according to key senators with
knowledge of the negotiations, the committee came within inches of
forging a compromise that might have assured Senate passage of the bill,
the newswire reported. But the White House was said to have nixed the
proposed deal, and the principals in the talks then went ahead with the
markup knowing a bipartisan measure probably would not make it to
adoption by the full Senate.
Although several knotty issues
split the two sides, the main stopper was a provision to empower a
proposed new regulatory agency to put the housing finance agencies into
receivership if they appeared to be facing financial failure. Committee
Democrats argued the receivership provision was an ideologically
inspired device to destroy the government sponsored enterprises and hand
over their mortgage portfolios to private lenders. Sen. John Sununu
(R-N.H.) took issue with Schumer's contention. The purpose, Sununu said,
was to assure money markets that investment in the mortgage agencies was
sound and to put in place a clear process to protect investors if a GSE
fails financially. Sen. Zell Miller (D-Ga.) was the only Democrat to
back GOP positions. After the markup, Banking Chairman Richard Shelby
(R-Ala.) declined to speculate on whether the controversial bill would
be scheduled for debate this session.
w:st='on'>Dan River Gets
Financing Approval From Court
Textile maker Dan River Inc. said
yesterday it received interim bankruptcy court approval of $145 million
in debtor-in-possession financing to fund its operations as the company
tries to restructure, Reuters reported. Dan
River filed a voluntary bankruptcy petition on Wednesday. A
hearing for final approval of the DIP facility is scheduled for April
27, though $40 million of the DIP financing -- which is being provided
by Deutsche Bank Trust Company Americas -- is available in the interim,
the company said. The court also approved other 'first day' motions that
will allow for payments to employees and vendors, the newswire
reported.
RCN
Anticipates Filing for Chapter 11
RCN Corp. said on Thursday that the
company had extended a forbearance agreement with lenders as it
negotiates a consensual bankruptcy reorganization plan, Reuters
reported. The company, which sells bundled cable television, phone, and
broadband service in urban areas, said it had agreed with its lenders to
extend a forbearance agreement until May 3, during which time the
company won't be declared in default on interest payments.
Parmalat
w:st='on'>USA
Plans Stay Bonus, Pay Raise For Some Execs
Parmalat USA Corp. is seeking
pay raises and bonuses for some executives to ensure that they stay with
the company during its chapter 11 bankruptcy case. According to a motion
filed with the U.S. Bankruptcy Court in
w:st='on'>Manhattan Tuesday, the unit of Parmalat
Finanziaria SpA is seeking approval to create a key employee retention
plan and provide its vice presidents with pay raises and continuation of
their existing severance plan.
The company needs approval of
the incentives because the workload of the covered employees has been
significantly increased due to the chapter 11 filing, and many of them
have expressed concern about job security, the motion said.
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Wide Impact Seen From Ruling
On UAL Municipal Bonds
Municipal bond lease
financing was thrust under a microscope Tuesday when a bankruptcy court
made some fine distinctions between 'leases' backing some $500 million
of United Airlines special facilities revenue bonds. A ruling in
Illinois by U.S. Bankruptcy
Judge Eugene Wedoff said the airline, a unit of bankrupt UAL Corp.,
must repay $261 million of the bonds issued for facilities at
w:st='on'>Denver
w:st='on'>International
w:st='on'>Airport, but not $248 million
issued as debt at three other airports. Chicago-based UAL, which halted
payments on about $1.7 billion of special facilities revenue bonds after
it filed for bankruptcy in December 2002, wanted to have all of the
bonds classified as unsecured debt, which wouldn't be payable during
reorganization.
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General Chemical Industrial Products Completes Chapter 11
Reorganization
General Chemical
Industrial Products Inc. announced yesterday in a press release that it
has completed reorganization under chapter 11 in the U.S. Bankruptcy
Court for the District of New Jersey. Its first amended plan of
reorganization, which was confirmed by the court on March 18, 2004,
became effective on March 31, 2004. The company's chapter 11 filing
excluded General Chemical (Soda Ash) Partners, all
w:st='on'>
w:st='on'>U.S. subsidiaries and
all non-U.S. subsidiaries, including General Chemical Canada Ltd.
General Chemical's previously existing common stock and 10 5/8 percent
senior subordinated notes have been deemed cancelled pursuant to the
plan. General Chemical's aggregate balance-sheet debt upon emergence is
approximately $52 million, representing a reduction of approximately
$106 million from the company's pre-petition funded debt of $158
million, according to the press release.
Lenders
w:st='on'>Battle With
WCI Steel Over Reorganization Plan
WCI Steel's secured
bondholders say they have a reorganization plan that would allow the
troubled steel company to emerge from bankruptcy on schedule in June,
and they want a federal bankruptcy court judge to let them file it,
Knight-Ridder reported. WCI insists it has a viable reorganization plan
in the works, however, and says the court can trust the company to
complete it on schedule. Under bankruptcy law, WCI had the exclusive
right to submit a reorganization plan for 120 days after its chapter 11
bankruptcy filing in September 2003, and a federal bankruptcy judge
later agreed to extend that exclusivity period through mid-May.
Wilmington Trust Co., trustee for the lenders, which hold $300 million
of WCI's long-term notes, however, filed a motion this week asking
bankruptcy Judge Marilyn Shea-Stonum to terminate that agreement, the
newswire reported. They argue that the company is behind schedule in
submitting a plan and that the Wilmington Trust plan is the only one
available that will allow WCI to follow its own timetable for emerging
from bankruptcy, the newswire reported.
A WCI spokesman argued that the
company is making progress on its reorganization plan and expects to
have it ready on or before its exclusivity rights expire May 15. Company
officials have said that they want to emerge in June so that they can go
forward with a critical $13 million relining of its blast furnace and
can install another necessary $25 million furnace upgrade. Details of
the lenders' plan have not been released, but an attorney representing
WCI has said that all interested parties, including the lenders, have
been looking at continuing mill operations, not liquidation. A hearing
on the motion will likely be scheduled in April in the federal
bankruptcy court in
w:st='on'>Akron, Knight-Ridder reported.
PG&E Bankruptcy Plan
Accounting Measure Approved
w:st='on'>
w:st='on'>California utility regulators on
Thursday approved accounting measures needed to put Pacific Gas &
Electric Co.'s bankruptcy reorganization plan into effect, Reuters
reported. The five-member California Public Utilities Commission
approved the measures on a 3-0 vote with commissioners Loretta Lynch and
Carl Wood abstaining, the newswire reported. The pair is fighting to
block the reorganization plan for the PG&E Corp.-owned utility, the
biggest in
w:st='on'>California, on grounds it unlawfully
locks in steep power prices for customers and binds future members of
the CPUC to the plan's terms. The reorganization plan has been approved
by the U.S. Bankruptcy Court in
w:st='on'>San Francisco and by a CPUC majority,
and the utility aims to emerge from bankruptcy on April 12. The utility
filed for chapter 11 protection on April 6, 2001, a casualty of
w:st='on'>California's flawed bid to deregulate
its electricity market. Lynch and Wood filed a motion on Tuesday in the
U.S. District Court in San
Francisco to stay implementation of the
reorganization plan. A court hearing is set for June 3, but the two
commissioners asked that their motion be heard as soon as April
8.
Air
w:st='on'>
w:st='on'>Canada to Ask Bankruptcy
Judge to Block Pension-pact Review
Air
w:st='on'>Canada will today ask a
bankruptcy judge to block the country's labor regulator from ruling on
an agreement the insolvent carrier signed with its biggest union on
pension-plan changes the company says it needs to emerge from creditor
protection, according to court papers, Bloomberg News reported. Air
w:st='on'>Canada said Wednesday it had
a tentative agreement with Jean Jallet, president of Local 140 of the
International Association of Machinists and Aerospace Workers, covering
11,500 union workers. The accord was immediately disavowed by David
Ritchie, national head of the union, who said Jallet wasn't authorized
to negotiate on pensions. Air
w:st='on'>Canada's lawyers said in the
court documents they oppose Ritchie's unfair labor practice complaint
against the company. Ritchie filed the complaint with the Canada
Industrial Relations Board, seeking to void the agreement. A decision by
the board to scuttle the agreement would undermine Air
Canada's efforts to
keep alive Hong Kong businessman Victor
Li's proposed C$650 million ($497 million) investment in the carrier. Li
has threatened to walk away from his investment, which will give him a
31 percent stake in
w:st='on'>Canada's biggest airline,
without concessions on pensions from the company's 27,000 unionized
workers, including pilots, flight attendants, the machinists and
reservation agents. Montreal-based Air
w:st='on'>Canada
has been operating under protection from bankruptcy for the past year
after amassing more than C$12 billion in debt and lease
obligations.
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