Asbestos
Senate Likely to Reject
Asbestos Litigation Reform Bill
A bill to overhaul
asbestos litigation, which the Senate will take up this afternoon, is in
serious trouble and has only a slim chance of passing Congress this
year, The Wall Street
Journal reported today. 'I think it's going to
be difficult,' said Sen. Sam Brownback (R., Kan.), one of a handful of
Republicans in the Senate who have criticized the bill. Even aides to
the bill's Republican backers doubt it will survive the Senate debate.
At issue is legislation that will come to the Senate floor today that
would create a $140 billion trust fund paid for by manufacturers and
insurance companies to compensate Americans who have become sick because
of their exposure to asbestos. Opponents plan to try to sink the bill by
filing a set of procedural and budgetary motions that would require
Specter to find 60 senators to back the bill, rather than the usual 51.
Separately, Minority Leader Harry Reid of
w:st='on'>
size='3'>Nevada
signaled that he plans to filibuster the legislation. Even if Specter is
able to pull off a surprise victory by moving the bill through the
Senate, the measure faces an uncertain future on the other side of the
Capitol. Republicans in the House are likely to craft a bill that
appeals more to the conservative base of the party, leaving little room
for the House and Senate to merge their competing asbestos bills before
lawmakers leave
face='Times New Roman'
size='3'>Washington
campaign for re-election.
href='http://online.wsj.com/article/SB113927154852566639.html?mod=us_business…'>Read
more.
Report Estimates Nearly
80 Corporations Bankrupted by Asbestos Lawsuits
The
w:st='on'>
size='3'>American
face='Times New Roman' size='3'>Academy
size='3'>of Actuaries says
w:st='on'>
size='3'>U.S.
size='3'>litigation over asbestos has bankrupted at least 78
corporations, according to the United Press International Monday. The
group`s Mass Torts Subcommittee also said more than 500,000 additional
asbestos lawsuits remain in the judicial pipeline. 'Despite the huge
costs, the asbestos litigation system has been inefficient, with only 41
percent of total spending reaching claimants,' the actuary group said in
a statement. The academy warned that the sheer volume of lawsuits means
'the sickest individuals might not be compensated adequately or
promptly.' Also, 'only 41 percent of total spending (reaches)
claimants.'
href='http://news.monstersandcritics.com/business/article_1095170.php/Report_…'>Read
more.
Ex-staffers return to
Hill to lobby on asbestos fund
The Senate’s long
war over the proposed asbestos-litigation trust fund has given the
lobbying industry its biggest contracts and busiest revolving door,
bringing a virtual army of ex-leadership aides back to their former
bosses’ doorsteps, according to The Hill today. The Fortune
500 corporations designated in the trust-fund bill’s second tier,
reserved for companies estimating more than $75 million in liability to
injured workers, have dispatched more than 20 outside firms to promote
the bill in addition to their in-house lobbying operations and the
efforts of the National Association of Manufacturers (NAM). Despite the
overwhelming amount of time and money invested, however, the
bill’s fate is uncertain at best.
href='http://www.thehill.com/thehill/export/TheHill/Business/020706_asbestos1…'>Read
more.
Calpine Restructing
Looks to Turn Leases over on Two
face='Times New Roman' size='3'>New England
size='3'>Plants
Calpine Corp. is asking
the U.S. Bankruptcy Court to approve giving up the leases to two
England
Chapter 11 restructuring proposal, the Silicon Valley Business Journal
size='3'>reported Monday. Under the proposal, the two plants totaling
530 megawatts, would be turned over to a Philip Morris Capital Corp.
subsidiary as of Monday, unless the court intercedes. San Jose-based
Calpine claims the lease obligations 'would cause significant harm to
the bankruptcy estate.'
size='3'>The plants are located in
face='Times New Roman' size='3'>Rumford
size='3'>,
size='3'>Maine
w:st='on'>
size='3'>Tiverton
w:st='on'>
size='3'>R.I.
supplied by these plants are typically sold into the wholesale
England
href='http://www.bizjournals.com/sanjose/stories/2006/02/06/daily14.html?from…'>Read
more.
GM Appears Headed for
Bankruptcy
In recent months both
Moody's and Standard & Poor's have made increasingly grim statements
that General Motors (GM) is headed for bankruptcy unless it can turn
around its reeling North American auto operations, now reduced to an
embarrassing market share of 26 percent, according to an article
in Fortune
Magazine yesterday. The company lost $8.6
billion last year, burning up billions of dollars in
w:st='on'>North
America
overseas. Its product mix in the
w:st='on'>
size='3'>U.S.
heavily weighted toward trucks, pickups, and SUVs, is on the wrong side
of gas prices. It has a finance subsidiary, GMAC, whose majority
interest it needs to sell to keep that business healthy and itself in
cash--and so far, no buyer has emerged. It is inextricably entangled in
the bankruptcy of its biggest supplier,
w:st='on'>
size='3'>Delphi
in countless others, it is up against a formidable and sometimes
militant union whose ability to accept the full reality of GM's problems
is not assured. The company is even under investigation by the SEC for
accounting sins, as yet unrevealed. GM is also burdened by health costs,
which it supplies for a population of 1.1 million employees, retirees,
and dependents. GM's retiree health burden, a mountain that at year-end
totaled an unfunded $64 billion, adds about $1,300 to the cost of every
car and truck GM makes in the U.S.
href='http://money.cnn.com/magazines/fortune/fortune_archive/2006/02/20/83691…'>Read
more.
Enron Official Says
`Aggressive' Accounting Discussed
Enron Corp. managers
discussed ``aggressive'' accounting practices used to meet earnings
targets during a meeting in 2001 led by ex-Chairman Kenneth Lay, a
former company executive testified, Bloomberg News reported Monday.
Prosecutors intend the testimony of Mark Koenig, Enron's former head of
investor relations, to refute Lay's defense that he was unaware that
subordinates manipulated the company's earnings. Koenig testified in his
third day on the witness stand that during a two-day managers' meeting
on Sept. 5-6, 2001, former Chief Financial Officer Andrew Fastow and
former accounting chief Richard Causey defended the company's accounting
practices when other managers challenged them.``Mr. Causey's and Mr.
Fastow's point was the accounting was aggressive, but it benefited a lot
of the people at the table,'' said Koenig, who attended the meeting.
Koenig said managers discussed the threat posed by two off- the-books
entities, known as Whitewing and Marlin. Fastow created the entities to
handle more than $1 billion in Enron-related financings without having
them recorded on the company's books.The case is
size='3'>v. Skilling, No. 04-cr-25, U.S. District Court, Southern
District of Texas (Houston).
href='http://www.bloomberg.com/apps/news?pid=10000103&sid=a.59Fghtyyo0#'>Read
more.
href='http://www.bloomberg.com/apps/news?pid=10000103&sid=a.59Fghtyyo0'>
Delays Continue for
WCI Steel Bankruptcy Case
size='3'>
Bankruptcy Judge Marilyn
Shea-Stonum said she decided to postpone confirmation hearings when
attorneys came up with a list of 63 “threshold legal issues”
to be settled before WCI Steel case can move forward, the Youngstown
Business Journal reported today. Most of the discussions centered
on two recent developments related to retiree pensions. First,
bondholders trying to win ownership of the company revealed in late
January that they won’t assume WCI’s under-funded pension
plan for 761 retirees. They intend to provide a new pension plan for
workers who retire under their corporation. Then, last Friday, the
federal Pension Benefit Guaranty Corp. filed a lawsuit in U.S. District
Court,
size='3'>Youngstown
WCI’s parent company, the Renco Group of
w:st='on'>
York
of the steel mill’s under-funded pension plan. Renco attorneys
argued that their client and WCI retirees will be hurt if the
bondholders leave the pension plan behind. They maintained that WCI will
be able to continue paying its retirees’ pensions, even under new
ownership. Judge Shea-Stonum called the hearing “chapter
three,” reminding attorneys that it was the third try at
confirmation hearings for WCI. She said Renco is “hugely
benefiting” by stretching out the chapter 11 case because the
steelmaker has been making regular pension payments, reducing the amount
Renco could be left with if it is forced to shoulder the plan.
href='http://www.business-journal.com/WCIConfirmationDetoured.asp'>Read
more.
w:st='on'>
size='3'>Louisville
face='Times New Roman' size='3'>Orchestra Musicians Look to Avert
Bankruptcy
In an effort to
jump-start stalled contract talks, the Louisville Orchestra's musicians
said yesterday they would accept a two-year wage freeze, the
Louisville
Courier-Journal reported today.
size='3'> They also said they would stop
trying to get the orchestra to cover the cost of dependent health
insurance. In exchange, the musicians want the orchestra to agree to
submit all other contract provisions to mediation. However, the
orchestra's executive director says the proposals address a limited
number of concerns, and a substantial restructuring would still be
needed to avoid a Chapter 7 bankruptcy liquidation. The freeze the
musicians say they are willing to accept is the same that management
offered recently -- which it said actually amounts to a 2.8 percent
increase over 24 months because of the way weekly salaries are
structured. The present contract expires Sept. 1, but management had
wanted an early agreement with its musicians. Provancher said the
orchestra was projecting a $500,000 deficit for the current season, and
that a $3.5 million recapitalization campaign was needed to address
immediate cash-flow pressures and to stabilize the orchestra over the
longer term.
href='http://www.courier-journal.com/apps/pbcs.dll/article?AID=/20060207/NEWS…'>Read
more.
Kaiser Aluminum Plan
of Reorganization Confirmed by
w:st='on'>
size='3'>U.S.
size='3'>Bankruptcy Court
Kaiser Aluminum today announced
that the U.S. Bankruptcy Court for the District of Delaware has
confirmed the company's second amended Plan of Reorganization (POR)
according to a company press release yesterday. The confirmation order
must now be affirmed by the United States District Court before the
company can emerge, and is also subject to appeal. Kaiser Aluminum is a
leading producer of fabricated aluminum products for aerospace and
high-strength, general engineering, automotive, and custom industrial
applications. 'We are very pleased by the ruling and it means that the
finish line is within sight,' said Jack Hockema, president and chief
executive officer, Kaiser Aluminum. 'We are hopeful that we can proceed
quickly through the steps necessary for us to emerge before the end of
the first quarter of 2006.' The company's restructuring would resolve
prepetition claims that are currently subject to compromise including
retiree medical, pension, asbestos, and other tort, bond, and note
claims.The majority of the new equity would be distributed to two
voluntary employee benefit associations that were created in 2004 to
provide medical benefits or funds to defray the cost of medical benefits
for salaried and hourly retirees. Retiree medical plans existing at that
time were cancelled.
href='http://biz.yahoo.com/bw/060206/20060206006104.html?.v=1&printer=1'>Read
more.
Airlines
Retired Pilots Given
Larger Voice in Delta Restructuring
Retired Delta pilots will get a
larger voice in Delta Air Lines' chapter 11 restructuring, a bankruptcy
court judge said Monday in a ruling that could complicate the airline's
bankruptcy proceedings, the Associated Press reported today. U.S.
Bankruptcy Judge Adlai Hardin said the retired pilots, who had no
representation on a previously appointed retiree committee, deserved
under law to have an official say in how Delta would restructure in
bankruptcy — and how that could affect their retirement benefits.
Hardin, in his first hearing since taking over the Delta case, said the
statute gave him no other alternative but to appoint a second 1114
committee to represent the retired pilots. However, he warned the pilots
that they would have to work closely with the other retirees committee
to ensure Delta's chapter 11 process continued as smoothly as possible.
Delta must now go before the two retiree committees as well as its
creditors as it goes through the bankruptcy process. The committees need
not agree on everything, however, as the judge overseeing the case is
the final arbiter of what Delta will and won't be able to do in order to
achieve solvency. In a separate matter, Hardin ruled that Delta can
continue using funds earmarked for a disability and survivors trust to
meet other financial obligations as it reorganizes under chapter 11, but
only so long as it continues to make payments to retirees and other
beneficiaries.
href='http://www.usatoday.com/travel/flights/2006-02-07-delta-pilots_x.htm'>Read
more.
New Federal Bankruptcy Judge
Appointed
Patrick Flatley, an
assistant U.S. Attorney for the Northern District of West Virginia, will
succeed Judge L. Edward Friend II as judge, according to an announcement
by U.S. District Court Chief Judge Ireme M. Keeley, the
face='Times New Roman' size='3'>Wheeling News-Register
size='3'>reported yesterday. Flatley will begin his new duties March 12,
succeeding Friend, who is retiring. The district covers the 32 northern
counties in the
w:st='on'>
size='3'>Mountain
face='Times New Roman'
size='3'>State
Flatley has been an assistant U.S. Attorney for nearly 20 years. He
currently serves as chief of the U.S. Attorney’s Office Civil
Division.
href='http://www.news-register.net/community/articles.asp?articleID=1904'>Read
more.
International
CBI Predicts New Pension
Rules May Cause a Cash Crisis
One in five British companies
that still run final salary pension schemes face a cashflow crisis
because of the government's new regulations that govern the pension
system, according to the Confederation of British Industry in a report
today in ABCMoney. The CBI said it is particularly concerned about the
Pension Regulator's approach to the funding of the defined benefit
pension schemes, which require an equivalent of at least 0.5 per cent of
GDP -- more than 5 billion pounds to diverted to pension schemes every
year over the next 10 years. The regulator has said it may take action
against firms failing to plug the deficit within 10 years. The said
pension fund trustees will be compelled to make companies adopt
aggressive funding plans without caring for their impact on the
business. 'It could have the perverse effect of throttling private
sector investment, thereby damaging the UK economy - putting the very
pension schemes the regulator is trying to protect under even more
pressure,' said CBI's deputy director general John Cridland. CBI said
the regulator should give time up to 15 years to close pension gaps to
companies that are financially strong.
href='http://www.abcmoney.co.uk/news/0720061881.htm'>Read
more.
Record
size='3'>Bankruptcies Boost Debt Management Firms
The record numbers of
people filing for bankruptcy or voluntary insolvency have helped drive
up profits at Debt Free Direct, one of
w:st='on'>
size='3'>Britain
size='3'>'s biggest debt management firms, according to the
Guardian
size='3'>today. The Aim-listed company said yesterday that its profits
for the nine months to January 31 were 'ahead of management
expectations,' and that it had enjoyed a 'very strong post-Christmas
response' to its advertising. Most debt management firms make much of
their money selling 'individual voluntary arrangements' (IVAs), and Debt
Free Direct said 600 clients applied for IVAs last month - up from 260
in January 2005.
href='http://money.guardian.co.uk/news_/story/0,,1704014,00.html'>Read
more.
href='http://money.guardian.co.uk/news_/story/0,,1704014,00.html'>