March 24, 2000
Senate's Failure on Procedural Motion Clouds Outlook for S.
625
Yesterday, Senate Majority Leader Trent Lott (R-MS) sought to call
up S. 625 for the purpose of separating the minimum wage and tax
provisions from the bill, allowing a clean bill to go to conference with
the House on H.R. 833. The move required unanimous consent, as does most
Senate action, but Democrats objected. While most Senate Democrats
support the bankruptcy bill (it passed 84-13 in early February), they
object to the Senate's three-year phase-in of the wage increase and the
business tax breaks contained in the package to soften the blow for
businesses affected by the hike. (The White House has threatened a veto
over the package, though President Clinton has said he would sign S. 625
otherwise). The tax provisions, if not separated, would be subject to a
point of order in the House, as all tax legislation must originate in
the House under the Constitution.
The failure further underscores how difficult it is to move
legislation—even apparently popular bills—given Senate rules
that permit non-germane issues such as the minimum wage to be attached
to legislation on the floor. With the election-year legislative calendar
growing shorter by the day, yesterday's action clouds the outlook for
enactment of a bankruptcy bill this year. And even assuming a conference
can begin soon, there remain significant areas of disagreement on the
merits for the conferees.
There is a way out of the procedural bind: to allow the Senate to
vote on a 'motion to instruct' its conferees on the wage package. This
might allow the bills to be split and conferees to be named. Of course,
the House parliamentarian could simply rule S. 625 in order, even with
the tax provisions, if it appeared there was no other way out.
CQ Daily Monitor reported that Senate Minority Leader Tom
Daschle (D-SD) said, 'We'll find a way to get it done, either the easy
way or the hard way.' Lott said, 'The Democrats have gotten themselves
and us into this bind...they've created a problem that is very hard to
unravel.' Democrats are seeking another shot at voting on a two-year
minimum wage increase, if only on a non-binding procedural vote to
instruct conferees. Daschle said, 'I don't think that's too much to ask.
It doesn't have to take a lot of time, but at least we ought to be able
to do that.' Lott responded that he is 'not inclined' to provide
Democrats with another minimum wage vote.
Health Care Group Urges Congress, White House to Restore Medicare
Funding for Seniors
The American Health Care Association (AHCA) and the Alliance for Quality
Nursing Home Care will launch a national advertising campaign urging
Congress and Vice President Gore to 'Keep the Promise' to America's
seniors by restoring Medicare funding for skilled nursing care. They say
the current crisis was set in motion when the Clinton administration
signed the 1997 balanced budget deal, which cut Medicare funding for
seniors needing skilled nursing care by $9.5 billion over five years.
However, last year alone the cuts were nearly twice as deep as
originally projected. Studies indicated the cuts will reach $15 billion
over five years. An executive of the Pennsylvania Health Care
Association, AHCA's state affiliates, said that due in large part to
these cuts, more than 1,600 skilled nursing providers nationally, and a
significant number of homes in Pennsylvania, have been forced to file
for bankruptcy protection. 'When health care providers file for
bankruptcy protection, it's a clear signal that our health care system
is in trouble,' the organization said.
Nursing Home Operator Considers Bankruptcy After Missing Interest
Payment
Pennsylvania-based Genesis Health Ventures Inc., a nursing home
operator, failed to make a $3.8 million interest payment to lenders this
week and has been granted a 60-day grace period to make payments on $1.5
billion in outstanding debt, The Washington Post reported.
Genesis is considering bankruptcy among its options, and is the latest
in a long line of nursing home companies to have serious financial
problems. Along with its colleagues in the industry, Genesis cites the
decrease in Medicare reimbursements. Prior to changes in Medicare
payments, Genesis received an average Medicare payment of $370 a day for
each patient in its nursing homes, whereas today it receives $86 per day
per patient. Genesis operates 50 nursing homes and two assisted-living
facilities that serve 8,000 people in Maryland, as well as eight nursing
homes and two assisted-living facilities serving 1,600 people in
Virginia.
Subprime Lender First Alliance Files Chapter 11, Blames Media for
Woes
First Alliance Corp., Irvine, Calif., a subprime lender, announced that
it and several of its subsidiaries have discontinued new loan
originations and filed for chapter 11 protection in the Central District
of California, according to a newswire report. The company said this
action was necessary due to legislative proposals limiting
revenue-generating capacity and recent unwarranted negative publicity
against the company arising from joint stories by The New York
Times and ABC News's '20/20' program. Chairman Brian Chisick said,
'First Alliance was created almost 30 years ago to provide a valuable
service to consumers in the subprime category, and the company has made
substantial investments to build that business. Unfortunately, the
company has been inaccurately and unfairly portrayed in recent stories
in the media. These unfair and inaccurate stories have devastated the
company's 30-year reputation and acutely hindered the company's
relationships with businesses, consumers and regulators.' First Alliance
will close all of its retail branches and origination centers
immediately and lay off about 85 percent of its nationwide workforce.
William Lobel of Lobel & Opera LLP, Irvine, Calif., is representing
the company in its chapter 11 case.
Key Plastics Files Chapter 11
Key Plastics L.L.C., Novi, Mich., and certain of its domestic affiliates
have filed chapter 11 in the Eastern District of Michigan, according to
a newswire report. Key Plastics has received a proposed commitment from
its lending group for up to $125 million in debtor-in-possession
financing, which is subject to the court's approval. Key Plastics has
grown from nine facilities in the United States and Mexico to 34
facilities in nine countries during the last five years. The company
designs and manufactures highly engineered precision plastic components
and subsystems.
Washington Millennium Event Organizer Considers Bankruptcy
Shack Events Inc., Falls Church, Va., is considering filing for
bankruptcy protection after scrapping a much-hyped New Year's Eve gala
at the MCI Center in Washington, The Washington Post reported.
Shack, which repeatedly claimed that tickets were moving at a rapid pace
for a sell-out gala, cancelled the event on Dec. 29, and many people who
bought $249 and $399 tickets may not get their money back. Promoter Mike
Harrigan had planned bands on every level of the MCI center, 150 open
bars and indoor fireworks, but only 3,500 of the 11,000 plus tickets
were sold. Most of those who purchased tickets through Ticketmaster have
received refunds, but those who bought directly from Shack Events have
not been as fortunate. Harrigan said he did not know if he could provide
a number for how many refunds Shack Events has issued, but said, 'There
has been very little money to do that.' His company, which has
previously staged eight successful New Year's Eve events, is considering
filing for bankruptcy.
Court Confirms Plan for DecisionOne
DecisionOne Corp., Frazer, Pa., announced that earlier this week the
Bankruptcy Court for the District of Delaware confirmed the company's
pre-packaged reorganization plan, completing the restructuring process
commenced in January 1999, according to a newswire report. DecisionOne
submitted its plan to the court with unanimous support from its relevant
creditor groups. DecisionOne, which employs more than 5,000 people, is
the largest independent provider of multivendor computer maintenance and
technology support services in North America.
Court Approves Agreement Between Zaremba Group and Pacific
International
The Bankruptcy Court for the Central District of California has approved
an agreement between Zaremba Group LLC and Pacific International
Enterprises (PIE), which will allow PIE to emerge from chapter 11,
according to a newswire report. The agreement is for a term of three
years and is automatically renewable for successive three-year terms.
Zaremba will market and resell PIEproducts, which include snowboards,
wakeboards, skateboards, skiboards, snow and water skis and other sports
products. Zaremba will acquire clear title to all existing PIE assets at
a base rent of $1 per annum. Zaremba has obtained $7 million in funding
to support PIE's emergence from bankruptcy, and $450,000 has been
earmarked for moving PIE to new manufacturing facilities in Southern
California, restarting its business operations and funding
administrative expenses that will need to be paid once the plan is
confirmed.
Fingerhut Buys Two Mail Order Catalogs
Catalog and online retailer Fingerhut Cos. Inc. said yesterday that it
acquired two women's apparel catalogs, Brownstone and Lew Magram,
previously owned by StyleSite Marketing Inc., which filed chapter 11 in
January. According to a newswire report, Fingerhut purchased assets in a
bankruptcy court sale that included inventory, trademarks and customer
lists.
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