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Bankruptcy Legislation Expected to Wrap Up
This Week
Republican leaders are hopeful that they can wrap up the bankruptcy
overhaul legislation this week, according to the CQ Daily
Monitor. House and Senate Republicans are expected to meet early in
the week to review a final draft of H.R. 833 before passing it on to
Democrats. If a final version becomes ready, it will likely be added on
to the crop insurance legislation (H.R. 2559), which is expected to
include emergency aid to farmers. House and Senate leaders had reached a
general agreement on Thursday, but new issues were brought up that
remained unsettled, such as whether states should be permitted to
establish their own home equity caps that debtors can keep from
creditors. Democrats have been left out of the negotiations and could
block the conference report if it contains provisions that they disagree
with.
'Is Bankruptcy Shameful?'
Financial expert Adriane G. Berg, along with ABCNews.Com, explores the
profile of one soon-to-be-divorcee as she makes struggles with issues of
bankruptcy. Read the full text of the article
HREF='http://abcnews.go.com/sections/business/PersonalFinance/makeover.html'
TARGET='window2'>here.
Tobacco Chief Says Company Cannot Pay Potential $50 Billion
Verdict
In a deposition taken in preparation for his testimony in a Florida
class-action lawsuit, Philip Morris's Chief Executive Officer and
President Michael Szymanczyk said that Philip Morris could not afford to
split half of what the tobacco companies could be required to shell out
the potentially $50 billion in punitive damages in smoker cases against
the industry, the Associated Press reported today. 'We would not be able
to pay this money if it was due in 30 days or in two years, for that
matter,' said Szymanczyk. 'We wouldn't be able to pay that money.' It is
up to a jury now as to what the tobacco company can afford to pay. An
estimated 500,000 sick Florida smokers are seeking $100 billion in
punitive damages and after a week of delays (the case was delayed by the
judge who needed the time to resolve a stack of motions that piled up
while he was on vacation), opening arguments are slated to begin today.
Florida law bars a punitive verdict from driving a company out of
business, but the party seeking damages normally sets the amount without
any intervention from a judge. The jury already has ruled against the
tobacco industry twice. If asked if the company's tobacco arm would go
to bankruptcy court, Szymanczyk said, 'I don't know what we would do.'
Philip Morris' net worth in the industry is at $7.1 billion.
Harnischfeger Announced Its Bankruptcy Claims Total $9.99
Billion
Harnischfeger Industries Inc., St. Francis, Wis., said in a recent
bankruptcy court filing that it has had 19,487 claims filed against it,
representing $9.99 billion in total liabilities, according to a Dow
Jones newswire report. The company, which manufactures pulp, paper and
mining equipment, says it has filed three separate objections to 351
claims totaling $1 billion, 602 claims totaling $468.4 million, and 59
claims totaling $1.89 billion. On Feb. 8, the U.S. Bankruptcy Court in
Wilmington, Del., granted an extension of Harnischfeger's plan exclusive
periods through June 8. The court will consider the company's request
for a four-month extension to reorganize at a June 7 hearing. The
deadline for objection is May 31. If Harnischfeger's motion is granted,
the company will have the exclusive right to file a plan of
reorganization through Oct. 1 and the exclusive right to solicit votes
in favor of the plan through Dec. 1. The company filed chapter 11 on
June 7, listing liabilities of $2.28 billion and assets of $2.88
billion.
Crescent Real Estate To Sell 23 Health Care Facilities
Crescent Real Estate Equities Co., a Ft. Worth, Texas, real estate
investment trust, reached agreements to sell 23 of the 37 behavioral
health care facilities leased to Charter Behavioral Health Systems LLC
for about $110 million, according to a Dow Jones newswire report. The
agreements will be presented to the court for approval on Thursday.
While the agreements have the consent of Charter Behavioral and its
secured creditors, they do not yet have the unsecured creditors'
consent. Charter Behavioral, which operated the majority of Crescent
Real Estate's health care facilities, filed for bankruptcy earlier this
year.
Superior National to Seek Approval of Employee Retention
Bonus
Superior National Insurance Group Inc., Oak Park, Calif., announced
today that Los Angeles Superior Court Judge Frances Rothchild continued
the motion of the California Insurance Commissioner, Chuck Quackenbush,
seeking approval of a retention bonus plan for Superior National's
employees until June 1, according to a newswire report. Superior
National was not provided with the bonus retention plan document until
minutes before the start of Friday's emergency hearing requested by
Commissioner Quackenbush. Superior National requested the superior court
to defer a decision until after a scheduled May 26 jurisdiction hearing
in U.S. Bankruptcy Court, and the superior court agreed to defer its
ruling until June 1. The motion regarding Commissioner Quackenbush's
jurisdiction is scheduled to be heard on Friday; the bankruptcy court's
decision will help resolve whether Superior National or Commissioner
Quackenbush is authorized to pay for the retention and continued work of
Superior National's employees. 'Superior National management has been
attempting to negotiate with Commissioner Quackenbush for the past 80
days the status of Superior National's employees, and the commissioner
has refused to even discuss the issue with us,' said Robert Nagle,
Superior National's senior vice president and general counsel. 'The
commissioner's delay is unconscionable in light of Superior National's
willingness to cooperatively resolve this and other important issues
with the commissioner without the necessity of emergency court hearings.
We can not understand why Commissioner Quackenbush appears to be
determined to address these and numerous other outstanding issues solely
by court action. Superior National management asks its employees to be
patient for the next 10 days, and we are confident that they will
benefit from this short delay.' Superior National Insurance Group, Inc.
is the parent company of SN Insurance Services, Inc., SN Insurance
Administrators, Inc., workers' compensation insurance servicing
organizations operating throughout the United States. Superior National
filed chapter 11 on April 26, and on March 3 announced that the
California Department of Insurance seized the assets and operations of
Superior National's four California-domiciled insurance subsidiaries.
Ruan Inc. Gives AccessAir $13 Million
Des Moines, Iowa-based Ruan Inc. said Friday it plans to provide the $13
million AccessAir needs to resume passenger airline service, according
to the Associated Press. A reorganization plan filed Friday in the U.S.
Bankruptcy Court in Des Moines said the company would provide all the
investment the start-up airline needs to resume commercial service. If
the plan is not approved at a bankruptcy court hearing June 1 the
airline will have to sell its assets and go out of business; liquidating
the company would generate $3.2 million. The airline has two full-size
passenger jets and would resume service from Des Moines to Chicago, Los
Angeles, Las Vegas and Orlando, Fla. Due to low ridership after 10
months of operation, the airline filed for chapter 11 protection on Nov.
29. AccessAir's court papers estimated its 1999 losses at $30 million.
Telia Internet Formally Acquires AGIS
Telia Internet Inc., Reston, Va., a wholly owned subsidiary of Telia
North America Inc., announced today that on Friday it formally closed
the purchase of substantially all operating assets of Apex Global
Information Services Inc. (AGIS), pursuant to a bankruptcy court order
in Detroit entered on April 25. Telia North America is a wholly owned
subsidiary of Telia AB, Stockholm, Sweden. TNA entered the U.S. market
in 1998 as a wholesale provider of both telecom and IP services.
Innovative Clinical Solutions Announces Bond Restructuring
Plan
Innovative Clinical Solutions Ltd., Providence, R.I., which provides
services for pharmaceutical and managed-care companies, announced today
that it intends to recapitalize the company by restructuring its $100
million 6.75 percent convertible debentures due 2003 into ICSL common
equity. The company will seek to convert this debt through a voluntary
prepackaged plan of reorganization of ICSL and its subsidiaries under
chapter 11. 'This is not, in any way, a traditional chapter 11 filing,'
said Michael Heffernan, president and chief executive officer of ICSL.
'The pre-packaged plan has already received the approval of ICSL's
largest individual bondholders, who own over 50 percent of the
outstanding debentures, and we have nearly completed negotiating the
final documents. I am pleased to say that no other lenders, trade
creditors or employees should be affected by this filing, and that it
should have no impact whatsoever on our day-to-day activities or on our
ability to meet our customer needs or our financial commitments.' Under
the proposed recapitalization, ICSL would issue new common equity to its
debentureholders and existing stockholders. Following the
recapitalization, approximately 90 percent of ICSL's common stock will
belong to the company's debentureholders, with the remaining 10 percent
being distributed to existing shareholders in exchange for their
existing shares.
GST Telecommunications Files for Bankruptcy
GST Telecommunications Inc., Vancouver, Wash., filed for chapter 11
protection with the U.S. Bankruptcy Court for the District of Delaware
in Wilmington on Wednesday, according to the NRC Chapter 11 Update. The
company had roughly $489 million in assets and $179 million in
liabilities. The company provides a range of integrated communications
products throughout the United States.
Residential Lawsuits May Force Manitoba Church Closing
A newswire service reported that the leader of a Manitoba Catholic
community says his order is on the brink of bankruptcy because of
residential school lawsuits. Father Jean-Paul Isabelle of the Missionary
Oblates of Mary Immaculate of Manitoba said he blamed unethical lawyers
and the province for not accepting greater responsibility for
residential schools. Residential schools existed in Canada from the
1880s until the early 1970s for the purpose of taking in native
children. In the past 10 years, accusations of physical and sexual abuse
have led to 7,000 lawsuits filed against the federal government and
several churches in Canada. Evatt Merchant, an attorney from the
Merchant Law Group, which represents more than 3,500 natives who lived
in residential schools, said his firm is simply acting on behalf of
people who have been victimized. Officials said the church has spent
more than $1.5 million on legal costs and fear the church could be
bankrupt by 2001.
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