June 22, 2004
Class Action Bill Likely To Be Delayed Beyond July Fourth
Despite an agreement weeks ago to move a bipartisan class action bill
to the floor immediately after the Senate completes work on the FY05
defense authorization bill, Majority Leader Bill Frist (R-Tenn.) is now
likely to postpone its consideration until after the July Fourth recess,
a Frist spokeswoman said yesterday, CongressDaily reported. The
spokeswoman added Frist now expects to move the class action bill to the
floor immediately after the Senate returns from the recess. Meanwhile,
business groups that support the class action bill are engaging in
last-minute lobbying to keep the legislation on this week’s
schedule, according to a senior Democratic aide. GOP leaders do not want
to let the class action bill “hang out over the recess,”
according to Frist’s spokeswoman. “I think we’ve also
heard that from Democratic co-sponsors as well,” she said, the
newswire reported.
Federal Help for United Appears to Be Less Likely
The chances of United Airlines being able to reverse the rejection of
its request for $1.6 billion in federal loan guarantees dimmed
yesterday, though the airline has yet to submit a third version of its
application, the New York Times reported. The likelihood of another
defeat grew after the Treasury Department came out in support of its
representative on the Air Transportation Stabilization Board, Under
Secretary Brian C. Roseboro. Last Thursday, Roseboro and Federal Reserve
Governor Edward M. Gramlich voted against United’s application.
The board’s third member, Jeffrey N. Shane of the Transportation
Department, abstained, saying that United, a unit of the UAL
Corporation, should be allowed to provide additional information in
support of its request. After the vote, the Treasury and Transportation
departments said the airline would be given time to try again despite
the “no” votes of its representatives, the newspaper
reported.
Kmart Investors Want More Detail at Annual Meeting
Kmart hosts its first annual meeting in three years today with its
stock at a post-bankruptcy high, but analysts and investors want details
on how the company plans to compete with Wal-Mart and Target, Reuters
reported. The Troy, Mich.-based discounter has two quarters of strong
profits to help it survive in a discount segment dominated by Wal-Mart
Stores Inc. and Target Corp., but analysts wonder what Kmart can do to
reverse years of declining sales. Kmart has kept a low profile since it
became the largest U.S. retailer to declare bankruptcy in January 2002,
and executives have refused numerous interview requests. Today’s
annual meeting presents a rare opportunity for investors to talk to
Kmart officials, the newswire reported.
“If you look at Kmart’s [same-store] sales, that has to
raise a red flag and make anyone wonder what they are going to do to get
sales moving in the right direction,” said Darrell Rigby, head of
Bain & Co.’s global retail consulting practice, the newswire
reported.
Onex Sells Loews Cineplex Movie Chain For C$2 Billion
Onex Corp. said on Monday it will sell Loews Cineplex for C$2 billion
($1.46 billion) to a group led by Bain Capital, just two years after it
led the world’s third-largest movie-theater chain out of
bankruptcy, Reuters reported. Toronto-based conglomerate Onex, which
owns Loews in partnership with Los Angeles-based Oaktree Capital
Management, said the two firms will retain Loews’ interest in
Canadian arm Cineplex Galaxy. Onex shares rose 9.7 percent to C$17.01
shortly after the market opened, before edging back to C$16.70 at around
midday on the Toronto Stock Exchange. Analysts welcomed the sale, which
had been expected after Loews’ owners announced in March that they
were looking for buyers, the newswire reported.
Turnaround Expert Presents Parmalat Plan
Turnaround expert Enrico Bondi on Monday presented the Italian
government with a restructuring plan aimed at saving Parmalat, the dairy
giant that sought bankruptcy protection after a massive fraud scandal
late last year, the Associated Press reported yesterday. The plan was
presented to Italy’s industry minister and is expected to be
approved quickly. The plan must then be approved by creditors at a
meeting slated for November or December.
Bondi’s plan calls for the sale of the dairy group’s
non-core assets, slashing the number of the group’s brands from
120 to 30 and concentrating on fruit juice, milk and milk-related
products, the newswire reported. Bondi has already put on sale the
group’s chocolates maker, Streglio, and part of the tourism
business run by the family of Parmalat founder Calisto Tanzi.
ISG Closes Georgetown Steel Acquisition
Cleveland-based International Steel Group Inc. (ISG) on Monday completed
its acquisition of bankrupt Georgetown Steel Co. of Georgetown, S.C.,
the Associated Press reported. ISG said it paid $18 million and assumed
the liabilities of Georgetown Steel, which made high-quality wire rod
products used to make wire rope and upholstery springs, among other
things, before it filed for bankruptcy protection and was idled last
October.
Last week, a South Carolina bankruptcy judge overturned a $20.9
million bid from Leggett & Platt Inc. to purchase Georgetown Steel and
instead declared ISG the high bidder. The judge said ISG’s plan to
keep the mill operating was a greater benefit to the community and
creditors, the newswire reported.
City Leaders Expect Good Outcome In Hearing On Bankruptcy
City leaders from Desert Hot Springs are looking forward to their
July 26 court date, the Desert Sun reported. What a Riverside Bankruptcy
Court judge says during that hearing could save the city from
bankruptcy. The city owes more than $10 million to various creditors,
which led to its bankruptcy filing in December 2001. The city’s
nearly 550 creditors are currently deciding whether or not to support a
bankruptcy payment.
Each of the city’s creditors has been sent a ballot and will be
able to cast a vote in favor of or against the plan. Read the article in
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Desert Sun
Probe Of Kenneth Lay Intensifies; Enron Ex-Chief May Be
Indicted
The long-running federal criminal probe of former Enron Corp.
Chairman Kenneth Lay has intensified, raising the anticipation that the
former chief executive will be indicted, possibly within the next few
weeks. In recent weeks, the Justice Department’s two-year-old
Enron Task Force has issued new subpoenas for documents and called a
parade of witnesses before a Houston grand jury, say people familiar
with the investigation. Two federal prosecutors have been assigned to
the Lay probe. Mike Ramsey, a lawyer for Lay, acknowledges that
prosecutors are looking hard at his client. However, he reiterated his
strong belief that Lay didn’t commit any crimes.
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London Judge To Decide On NatWest Bankers Extradition Friday
Three NatWest bankers accused of defrauding the bank of $2.4 million
each in an Enron Corp.-related scheme were given a five-day reprieve
Monday as the judge decides whether the charges levied against them
warrant extradition to the U.S.
Judge Nicholas Evans heard arguments at Bow Street Magistrates Court
on whether Giles Darby, David Bermingham and Gary Mulgrew should be sent
to Texas in order to stand trial for conspiracy to commit wire fraud.
But after six hours of competing legal analysis that deconstructed the
2003 U.K. extradition law and harkened back to 19th century
jurisprudence, Judge Nicholas Evans announced he would make a decision
later in the week.
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Lawyer Calls Adelphia Trial a Witch Hunt of His Client
A defense lawyer yesterday compared the prosecution of a former
Adelphia Communications executive to the Salem witch trials and urged
jurors not to assign him a post- Enron “presumption of
guilt,” the Associated Press reported. Paul Grand, making a
closing argument on behalf of Timothy J. Rigas, a former Adelphia CFO,
said his client was nothing like the executives who ran the Enron
Corporation - people he called real corporate villains. “It really
is a little bit like a witch hunt,” Grand said in Federal District
Court in Manhattan. “In anger and fear, people see witches that do
not exist. It’s not a new phenomenon in this country. It happened
400 years ago,” the newswire reported.
New Bankruptcy Law Is Proposed in China
China’s national legislature will begin reviewing proposed
bankruptcy legislation that for the first time would set market-based
ground rules for state-run and privately held Chinese companies to
declare insolvency, the Wall Street Journal reported. A draft of the
long-awaited Business Bankruptcy Law was submitted to the National
People’s Congress standing committee yesterday, and could be
passed by early 2005, drafters of the bill say. Generally, the Chinese
legislature rubber-stamps bills that are submitted to it.
The proposed legislation would allow failing state-run enterprises to
go bankrupt according to market principles and stipulate guidelines for
bankruptcies in the nonstate sector. Existing law addresses only
state-sector bankruptcies and puts the interests of workers, not
creditors, first, the newspaper reported.
Directv Says Can Sell Services In Pegasus Area
DirecTVInc., the Rupert Murdoch-controlled satellite television
broadcaster, on Monday said a federal judge has denied a temporary
restraining order preventing it from marketing its service in areas
served by Pegasus Communications Corp., Reuters reported. The ruling
from U.S. bankruptcy court in Portland, Maine, lets the satellite TV
service sell into areas operated by Pegasus, a reseller of DirecTV
service. Pegasus sued DirecTV in bankruptcy court in June, charging it
with joining forces with the National Rural Telecommunications
Cooperative with joining to “destroy” Pegasus.
Global Crossing: Review Finds No Management Issues
Global Crossing Ltd. on Monday said an external review concluded that
management had no prior knowledge of an understatement in access charge
liabilities that forced it to withdraw its reported 2002 and 2003
financial statements, Reuters reported. The telecommunications company
in late April said it had understated access charges -- fees paid to
other companies for connecting calls -- by $50 million to $80 million in
2003. It emerged from bankruptcy in December, having collapsed under
more than $12 billion in debt the year before. But Global Crossing said
the review by Deloitte & Touche “did not reveal any management
integrity issues” or find any prior knowledge that the 2003
results were understated ahead of the actual filing of those results
this March, the newswire reported.