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October 14, 2003
Senate Leaders Push Stakeholders For Asbestos Deal
Senate leaders are trying to reach a deal on asbestos litigation
reform by securing an industry payment scheme this week,
CongressDaily reported. Lawmakers are pressing industry
negotiators to meet a Monday deadline for deciding how to pay for a
trust fund that would be used to compensate victims of asbestos-related
illnesses. Lawmakers want faster progress on talks with insurance
companies and companies that are defendants in asbestos lawsuits, as the
groups try to salvage efforts to pass asbestos litigation reform
legislation this year. Senate Majority Leader Bill Frist (R-Tenn.) is
hoping industry will be able to reach initial agreement on how to divide
up the cost of the multibillion dollar trust fund, paving the way for
more talks on the substance of the bill.
Frist and his staff met with industry representatives on Thursday and
Friday, and have asked each industry segment to report to him by Monday
on how much they are willing to pay into the fund. Insurers previously
have stated that they are unwilling collectively to pay more than $45
billion, essentially refusing the proposal that the insurance industry
split the cost of the fund evenly with defendant companies, which are
mostly manufacturers.
The bill, which the Senate Judiciary Committee approved on a
near-party-line vote, would replace the existing court system with a
$108 billion or larger trust fund to compensate victims of
asbestos-related illnesses. The federal trust fund would consolidate
existing private asbestos trust funds and require insurers and defendant
companies to split the cost of the remaining amount, expected to be at
least $104 billion, reported the newswire.
Xcel Wins U.S. Order Advancing NRG Bankruptcy Plan
Xcel Energy Inc. won approval from the Securities and Exchange
Commission for its insolvent NRG Energy unit to solicit creditors to
back a reorganization plan, Bloomberg News reported. The plan will be
sent to creditors for a vote once the court overseeing NRG's bankruptcy
approves the final documents, Xcel said.
NRG filed for bankruptcy in May to help restructure debt accumulated
from building and buying power plants before prices collapsed in
wholesale electricity markets. Xcel aims to settle the bankruptcy by the
end of 2003 and pay creditors about $752 million next year. 'Receiving
SEC approval at this time is another key step toward meeting our
timeline for a final resolution by mid-December,'' Xcel CFO Richard
Kelly said, reported the newswire.
Chevys Files for Bankruptcy, Plans to Reorganize
Chevys Inc., which runs Chevys Fresh Mex, Fuzio Universal Pasta and Rio
Bravo restaurants, said it filed for chapter 11 bankruptcy protection
and plans to reorganize
its business and close some restaurants, Bloomberg News reported.
Emeryville, Calif.-based Chevys owns 77 Chevys Fresh Mex restaurants and
40 franchise restaurants, which 'continue to produce strong cash
flows,'' said Chevys President and Chief Executive Ron Maccarone in a
statement issued by PR Newswire.
The company has had 'continuous problems with the Rio Bravo''
restaurant chain since acquiring the group in 1999, Maccarone said.
Chevys said it considered various options and then decided to close the
chain and file for chapter 11. The company expects to have fewer
restaurants once it emerges from bankruptcy protection, reported the
newswire.
Penn Traffic to Close 16 Supermarkets, Fire 1,035
Penn Traffic Co., which operates 211 grocery stores in the eastern
United States, said it will seek bankruptcy court approval to close 16
supermarkets and eliminate about 1,035 jobs by year's end, Bloomberg
News reported. The proposed store closings in New York, Pennsylvania,
Ohio and West Virginia, include locations that are 'among our least
profitable,'' with 'little or no potential for them to become more
profitable in the future,'' Steven Panagos, the company's CEO, said in a
statement.
The Syracuse, N.Y.-based company filed for chapter 11 protection in
U.S. Bankruptcy Court in White Plains, N.Y., in May, listing about $736
million in debts, including $100 million in defaulted 11 percent
callable notes due in 2009. The filing was Penn Traffic's second in
recent years. The company exited bankruptcy in June 1999 after canceling
$1.3 billion in notes in exchange for new notes and common stock. The
company last year said it would restate financial results after a former
employee overstated inventory by about $10 million, reported the
newswire.
Smithfield Wins Bidding to Acquire Farmland Pork Unit
Smithfield Foods Inc. will acquire Farmland Industries Inc.'s pork
business for $367.4 million after creditors rejected a bid from Cargill
Inc. in a bankruptcy court auction, Bloomberg News reported. Smithfield
was selected as the winning bidder and will assume some Farmland
liabilities that include pension payments estimated at $90 million, the
Smithfield, Va.-based company said in a statement.
The purchase will be the biggest for Smithfield since it began
expanding into the beef business in 2001 to compete with Tyson Foods
Inc., the world's largest meat producer. Smithfield has acquired 10
businesses since January 2001 at a cost of more than $492 million,
excluding the Farmland assets. Farmland's pork unit had sales of $1.8
billion last year and has 6,100 employees. Smithfield sales totaled $7.9
billion last year. The purchase is still subject to bankruptcy court
approval, set for a hearing on Oct. 28, Smithfield said, reported the
newswire. Farmland, which is owned by 600,000 farmers, filed for chapter
11 protection from creditors in May 2002 after a slide in fertilizer
sales left it unable to make payments on $1.5 billion in debt.
EchoStar Opposes Loral's Sale Of North American Satellites
EchoStar Communications Corp. objected to Loral Space &
Communications Ltd.'s proposed sale of its North American satellite
fleet, according to court papers.
According to an objection filed in bankruptcy court late Wednesday,
EchoStar Communications said it opposes the sale because it recently
offered $1.85 billion for all of Loral's assets. Also, the objection
said, Loral 'will have lost the ability to maximize the value' of its
assets if it goes ahead with the sale of its North American fleet. As
reported, Loral rejected EchoStar Communications' $1.85 billion offer to
acquire all of its assets, saying the bid undervalued the company.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Enron North America Seeks $45 Million From Goldman Sachs
Goldman Sachs Group Inc. said on Friday that Enron North America
Corp. is seeking to recover $45 million and other damages from the
company in connection with an early termination of a 2001 derivatives
agreement, according to its quarterly report filed with the Securities
and Exchange Commission. The company said that on Sept. 26 Enron North
America began an adversary proceeding in the U.S. Bankruptcy Court in
Manhattan against Goldman Sachs Group Inc., Goldman Sachs Capital
Markets L.P., and Goldman Sachs Group LP. The filing said obligations
under the agreement, which dealt with trading over-the-counter
derivatives between Enron North America and Goldman Sachs Capital
Markets, were allegedly guaranteed by Goldman Sachs Group Inc. and its
predecessor Goldman Sachs Group LP.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Kasper Has Interim OK Of Disclosure; Note Interest Not Set
Kasper ASL Ltd. received contingent approval of the disclosure
statement outlining the terms of its plan to pay off creditors,
attorneys involved in the case said. The disclosure statement was
approved subject to some minor changes that Kasper has agreed to,
Kasper's attorney, Alan Miller, told DBR Monday. The U.S. Bankruptcy
Court in Manhattan gave the approval Friday, and Miller, of Weil Gotshal
& Manges LLP, said he expects the final order will be signed today.
However, a key issue for unsecured creditors and Kasper stockholders
regarding the interest payments senior noteholders will receive has yet
to be resolved.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Denver Aquarium Bondholders Recoup 27 Percent From Landry's
Purchase
Holders of $56.8 million of defaulted municipal bonds from Denver's
Ocean Journey aquarium have received a final payment from the issue,
bringing investors' total recovery to 26.8 cents on the dollar,
Bloomberg News reported. Houston-based Landry's Restaurants Inc. agreed
to pay $13.6 million to buy the aquarium out of bankruptcy in March,
according to a notice from the trustee, US Bank N.A. The trustee said it
was
making a $2.24 million payment this month to investors, bringing the
total payments to bondholders to $15.24 million.
WORLDCOM
Citigroup, Grubman Ask Court for WorldCom Documents
Citigroup Inc. and its former telecommunications-stock analyst, Jack
Grubman, asked a court to compel WorldCom Inc. to provide documents to
aid in defending a fraud suit stemming from the telephone company's
collapse, Bloomberg News reported. The request is related to a
class-action lawsuit filed against Citigroup and others in April 2002 by
shareholders of WorldCom. The move was disclosed in a filing with the
U.S. Bankruptcy Court in Manhattan, which is overseeing WorldCom's
reorganization.
Citigroup and Grubman are seeking documents related to WorldCom's
dealings with underwriters, including Citigroup, Grubman's attendance at
the telephone company's board meetings and the resignation of Bernie
Ebbers, who stepped down in April of last year, the filing said. The
motion will be heard Oct. 29, reported the newswire.
AT&T Lets WorldCom Proceed
AT&T Corp. agreed to drop objections in federal bankruptcy court to
portions of WorldCom Inc.'s reorganization plan, removing a potential
obstacle to WorldCom's ability to emerge from chapter 11 later this
fall, the Washington Post reported. AT&T had disputed part of
the reorganization plan that would have required it to resolve a fraud
allegation against WorldCom in bankruptcy court. In a joint filing with
WorldCom, AT&T dropped that objection. But AT&T vowed to pursue
the allegations as part of a federal racketeering and fraud suit in U.S.
District Court in Alexandria. 'We agreed to disagree on certain things,'
said AT&T spokesman Jim Byrnes. 'But the things we disagree on will
not in any way impede the process of the bankruptcy case,' he said,
reported the Post.
AT&T has alleged that WorldCom illegally routed some domestic calls
into Canada and onto AT&T's network, leaving it to pay millions of
dollars in fees that should have been paid by WorldCom. WorldCom denied
any wrongdoing and said the practice is common within the industry.
W. R. Grace Asks Court for OK to Hire New President, COO
Chemicals maker W. R. Grace & Co. asked the U.S. Bankruptcy Court
for permission to hire a president and chief operating officer, Reuters
reported. Paul Norris, who currently serves as the company's chairman,
president and chief executive officer, would continue to serve as
chairman and CEO. Norris said he recommended that the company's board
create the new position as part of the succession planning process.
Grace, currently in chapter 11 bankruptcy reorganization, said a court
hearing has been scheduled for Nov. 17.
American to Recall 390 Flight Attendants
American Airlines said on Friday it would recall 390 furloughed flight
attendants, Reuters reported. The flight attendants are the most senior
members on furlough and will return to work at American, part of AMR
Corp., for the busy year-end holiday period when the airline plans to
add seasonal flights, a company spokesman said. 'Although the future
continues to be somewhat uncertain, this recall certainly represents a
bit of good news when that's in short supply these days,' said John
Ward, the president of the union that represents flight attendants at
American, reported the newswire.
Not-for-profit Credit Counselors Are Targets of an I.R.S.
Inquiry
The Internal Revenue Service is investigating the business practices of
nonprofit credit counseling services, which advise millions of people in
debt, the New York Times reported. The investigation could
jeopardize the agencies' nonprofit status just as a proposed change in
federal bankruptcy law stands to steer many more thousands to debt
counseling. As nonprofit concerns, the agencies are now exempt from
dozens of state and federal regulations. The I.R.S., the Federal Trade
Commission and state regulators plan to issue an unusual joint advisory
today warning consumers to be wary about the total costs when seeking
help from tax-exempt credit counseling organizations.
'Consumers need to know not to read too much into not-for-profit status
- that's no guarantee that someone is legit,' said C. Steven Baker,
director of the Federal Trade Commission's Midwest operations. 'A lot of
these credit counseling companies are using tax-exempt status as a
get-out-of-regulation-free card. That's why we're teaming up with the
I.R.S. on this issue,' he said, reported the Times.
Consumer advocates say the actions are long overdue, and many credit
counselors say they welcome the scrutiny because they believe that some
new entrants are giving the entire industry a bad name, reported the
Times. An estimated nine million people sought the help of credit
counseling services last year, according to the National Consumer Law
Center and the Consumer Federation of America. From these and earlier
inquiries, at least one million people have consolidated their debts,
and are now making a single payment each month to the agencies, which in
turn distribute the money to creditors, reported the newspaper.
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