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July 12, 2005
Consumer Credit Falls in May for First Time Since 2003
U.S. consumer credit dropped in May for the first time since November
2003, falling by 1.7 percent or $3 billion, the Federal Reserve said on
Friday, MarketWatchreported. Revolving credit, such as
credit card debt, increased by 1.1 percent, but nonrevolving credit like
auto loans fell by 3.4 percent. The drop was unexpected. Economists
polled by MarketWatch were forecasting a rise of $3.5 billion.
Enron Settles Pension Claims
The Enron Corporation agreed to settle government and employee claims
against its retirement plans for $356.25 million, the Labor Department
said yesterday, Reuters reported. The agreement settles claims by the
department and retirement plan participants who accused Enron, its
directors, officers and administrators of violating retirement laws in
the way they managed the company’s 401(k) plan, employee stock
ownership and cash balance plans.
Ebbers’s Settlement Is Approved by Court
A federal district judge gave preliminary approval yesterday to a
settlement that calls for the former CEO of WorldCom, Bernard J. Ebbers,
to forfeit cash and personal assets worth as much as $45 million, the
Associated Press reported. Judge Denise L. Cote of Federal District
Court in Manhattan approved the deal two days before Ebbers faces
sentencing on his criminal conviction in the WorldCom accounting fraud.
Major investment banks that underwrote WorldCom securities, the
accounting firm Arthur Andersen and 12 former WorldCom directors have
reached settlements and agreed to pay a total of more than $6
billion.
Southern Extends Deadline to Respond to Mirant Suit
U.S. power company Southern Co. yesterday said it reached an
agreement to push back its deadline to respond to the more than $2
billion lawsuit filed by a former subsidiary, bankrupt energy trader
Mirant Corp., Reuters reported. A Southern spokeswoman said the company
had reached a stipulation with Mirant to extend the deadline to Aug.
17.
Jetblue Backs ’05 Profit, but Margins Could Shrink
Low-cost JetBlue Airways Corp. yesterday affirmed that it would post
a profit in the second half of 2005 under current expectations for jet
fuel prices, but said operating margins could shrink, Reuters reported.
The New York–based airline said at $1.68 a gallon it continues to
expect to make an operating profit. However, at that same price, the
operating margins could be lower than the company’s prior
forecast, which assumed fuel prices at $1.45.
Law Could Trigger Chapter 11 Surge
Looming changes in corporate bankruptcy law could prompt a rush to
the courthouse by ailing companies in search of easier treatment,
USA Today reported. Starting Oct. 17, new creditor
protections in the law will make bankruptcy reorganizations harder and
more expensive for companies seeking protection under chapter 11. Two
big airlines—Delta and Northwest—have recently warned of the
possible need for chapter 11 protection. In general, says bankruptcy
lawyer Jon Schneider of Goodwin Procter in Boston, “There’s
probably going to be a raft of filings in September to avoid this new
law.”
Judge Approves Tuscon Diocese Bankruptcy Plan
A judge approved a reorganization plan for the Roman Catholic Diocese
of Tucson on Monday, paving the way for it to become the first in the
nation to emerge from bankruptcy, the Gadsden Times
reported. Under the plan approved by Judge James Marlar, the diocese
agreed to make available $22.2 million for settlements in claims of sex
abuse by priests and church workers.
Judge Turns Down Winn-Dixie Retirees
A U.S. Bankruptcy Judge last week rejected a bid by Winn-Dixie Stores
Inc. retirees to be considered a group of creditors in the
company’s chapter 11 reorganization, the Florida
Times–Union reported. In a ruling dated July 6, Judge Jerry
Funk wrote that the retirees are sufficiently represented by the
existing creditors– committee and appointing a separate committee
would be premature since the retirees are still receiving their payments
on schedule.