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April 19, 2007
name='1'>Lawmakers Take Issue with
Executive Pay in Chapter 11 Cases
House Judiciary Committee
Chairman John
Conyers Jr. (D-Mich.) is reportedly working on legislation that would
curb executive
compensation in chapter 11 bankruptcy cases, Bankruptcy Law 360 reported
yesterday. At
Tuesday’s hearing of the House Judiciary Subcommittee on
Commercial and Administrative
Law, Conyers Jr. said that his new bill would contain even more
provisions than a bill he
introduced in the last congressional session. That bill, the
“Fairness and
Accountability in Reorganizations Act of 2006,” never made it to
the House floor for a
vote. If passed, it would have required bankruptcy courts to approve all
bonuses and
incentives for executives, and to take into account a company’s
foreign assets before
allowing it to break its collective bargaining agreements.
At Tuesday’s hearing, other lawmakers also
weighed in on whether
executive compensation in chapter 11 bankruptcy cases had gone too far.
“Chapter 11
protection was enacted to give all participants an equal say in how a
business, struggling
to overcome financial difficulties, should reorganize,” said Rep.
Linda Sánchez
(D-Calif.) “We see the unfortunate reality, however, in the
numerous chapter 11 cases
in which senior executives receive outrageously large compensation
packages while–and
indeed because–they simultaneously slash wages, benefits, and even
jobs of their
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22924'>Read
more.
(Registration required.)
name='2'>Legislation Seeking
Shareholder Vote on Executive Pay Debated in House
Shareholders would have
the right to a
nonbinding vote on the pay packages of senior executives of public
companies under a bill
that the House began debating Wednesday, the New York Times reported
yesterday. The measure would
also give shareholders the right to vote on any “golden
parachute” compensation
plans that are awarded to executives while they are negotiating the
purchase or sale of a
company. The measure by Rep. Barney Frank (D-Mass.), supported by
Democrats and opposed by
Republicans, is expected to be approved by the House by the end of the
week. However, it
faces significant political obstacles. There is no comparable measure in
the Senate, and the
White House issued a statement opposing the legislation, saying it
“does not believe
that Congress should mandate the process by which executive compensation
is approved.”
The statement noted that the Securities and Exchange Commission last
year approved a
regulation requiring companies to provide more detailed information to
shareholders about
the pay of top executives and that other changes in rules had
strengthened the governance of
href='http://www.nytimes.com/2007/04/19/business/19pay.html?_r=1&oref=slogin&ref=bus
iness&pagewanted=print'>Read more.
name='3'>Victims, Parishes
Back
size='3'>Diocese
Deal
All victims of clergy sex
abuse and all of
the parishes involved in the
face='Times New Roman'
size='3'>Spokane (
w:st='on'>
w:st='on'>
size='3'>Wash.
size='3'>) Diocese's bankruptcy have voted in favor of a $48 million
bankruptcy settlement,
the Spokane Spokesman
Review
reported yesterday. Almost 250 votes were cast by
sex-abuse victims, parishes
and service providers to the church. The vote may bolster the expected
confirmation of the
settlement and related bankruptcy plan by U.S. Bankruptcy Judge Patricia
Williams next
week. Ford
Elsaesser
size='3'>, an attorney representing the Association of Parishes, called
the vote an
important marker. 'It's a compromise situation that certainly some
people out there think
it's too much money, and there's some on the claimants' side that think
it's too little,'
Elsaesser said. 'But it is an achievable obligation.'
Subprime
Mortgages
name='4'>Lenders Offer Help for
Subprime Mortgage Holders
Freddie Mac, the mortgage
giant, said
yesterday that it would buy as much as $20 billion in subprime
mortgages, while a lender,
Washington Mutual, offered to refinance $2 billion in loans as the
mortgage finance industry
made its biggest gesture yet to help borrowers with poor credit
histories avoid losing their
homes, Bloomberg News reported today. At least 50 lenders have failed
since the beginning of
last year, more than one-eighth of subprime mortgages were delinquent in
the fourth quarter,
and foreclosures rose 47 percent in March from a year earlier. Freddie
Mac, a leading source
of money for home loans, said that lenders could count on the $20
billion to finance less
burdensome loans for subprime borrowers. Washington Mutual, the
biggest U.S.
size='3'>savings and loan, said it will refinance some adjustable-rate
subprime mortgages
into 30-year, fixed-rate loans with interest rates that are half a
percentage point less
href='http://www.nytimes.com/2007/04/19/business/19lend.html?pagewanted=print'>Read
more.
name='5'>Senate Banking
Chairman Tempers Hopes for Subprime Legislative
Remedy
Senate Banking Chairman
Chris Dodd (D-Conn.)
indicated yesterday that he is not eager to move legislation to correct
abusive lending
practices in the subprime market and encouraged federal banking
regulators to take more
steps to prevent homeowners from facing foreclosure,
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;Roman' size='3'>CongressDaily reported
yesterday. 'I'm not overly
anxious to legislate,' Dodd said after a closed-door summit with federal
officials, lenders
and community groups. 'We would like to avoid it.' Dodd contends that
the Federal Reserve
could use its authority under the Home Ownership and Equity Protection
Act and the FTC Act
to prohibit abusive loan practices for all mortgage markets, no matter
if they have a
federal or state charter. An additional step, he said, also could be
taken under the federal
Truth in Lending Act. Dodd and Banking ranking member Richard Shelby
(R-Ala.) said that they
opposed a plan by Sen. Charles Schumer (D-N.Y.) to establish a bailout
fund of 'hundreds of
millions of dollars' for local nonprofit groups to help
prevent subprime borrowers from
going into foreclosure.
name='6'>Subprime Lender
Shuffles Cure Schedule before
w:st='on'>Sale
Following objections from
warehouse lenders,
People’s Choice Home Loan Inc. on Tuesday removed several
contracts from a cure
schedule that was distributed prior to the sale of the bankrupt subprime
lender’s
remaining assets,
size='3'>Bankruptcy
Law360 reported yesterday. Several companies
that had made
pre-petition agreements with People’s Choice, including UBS
Securities Inc. and Bear
Stearns Co. Inc., objected on Monday to the company’s recent
announcement in the U.S.
Bankruptcy Court for the Central District of California that it was
selling off the rest of
its assets, including any obligations owed to its financiers.
People’s Choice issued a
notice to counterparties of executory contracts and unexpired leases on
April 6, making the
parties aware that the contracts and leases could be assumed and
assigned during the sale of
the company’s remaining assets. People’s Choice attached a
lengthy cure schedule
to the notice, listing many nondescript agreements. But after receiving
objections from Bear
Stearns, UBC, Wells Fargo Bank
font size='3'>NA, Credit Suisse First
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;Roman' size='3'>Boston, and
Residential Funding
size='3'>Co.
size='3'>LLC, questioning the inclusion of their agreements on the cure
schedule,
People’s Choice on Tuesday removed a number of the contracts from
the notice.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22952'>Read
more.
(Registration required.)
name='7'>Lawmaker Calls for Action
on Student Lending Practices
House Education and Labor
Chairman George
Miller (D-Calif.) called yesterday for immediate action to stop lending
companies from
wooing college financial aid administrators with luxury travel in
exchange for steering more
student loan business to them,
size='3'>CongressDaily reported yesterday.
Miller demanded that
Education Secretary Spellings 'implement emergency reforms in the
student loan industry,'
amid a widening scandal involving cozy relationships between lenders and
college financial
aid officers. New York Attorney General Andrew Cuomo has been pursuing a
high-profile
investigation into the use of so-called preferred lender lists by
universities. Student
lending giant Sallie Mae agreed to pay $2 million in a settlement last
week as a result of
the Cuomo investigation. Miller requested an inspector general
investigation of all senior
Education Department employees 'to ensure they have no conflicts of
interest with student
[loan] lenders.'
name='8'>Delphi May Get New
Bid from
size='3'>Highland
size='3'>Capital
Highland Capital
Management, a Dallas-based
hedge fund, wrote to
size='3'>Delphi
size='3'>yesterday reiterating its interest in making another
unsolicited offer for the auto
supplier, the Wall Street
Journal
size='3'>reported today. The letter didn't lay out financial terms, but
said
size='3'>Highland wants to
'pursue a
transaction similar' to its rejected December offer, which was valued at
$4.7 billion, but
based on current economics. A group led by Cerberus Capital Management
is offering as much
as $3.4 billion to bring Delphi out of bankruptcy protection, but talks
hit a roadblock over
the United Auto Workers union's refusal to cut wages and benefits for
new and future
size='3'>Delphi
size='3'>hires. Appaloosa Management LP and Harbinger Capital Partners,
the No. 1 and No. 3
holders of
size='3'>Delphi equity, are part of
the group.
href='http://online.wsj.com/article/SB117694801336375025.html?mod=us_business_whats_news'>Re
ad more. (Registration required.)
name='9'>Adelphia Settles Claims
with Utilities
Bankruptcy Judge
Robert
Gerber
size='3'>signed off on agreements between Adelphia Communications Corp.
and two power
companies, settling claims against the former bankrupt cable provider
for $1.85
million, Bankruptcy Law360 reported
yesterday. The
settlements with Southern California Edison (SCE) and Duke Energy Corp.
resolve all disputes
between the parties over claims by the utilities relating to electricity
accounts and other
agreements. Under the deal Adelphia, which emerged from bankruptcy in
February, will pay
$1.813 million to SCE and a further $45,639 to Duke within ten days of
the court’s
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22883'>Read
more. (Registration required.)
w:st='on'>
face='Times New Roman' size='3'>
name='10'>Arizona
face='Times
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&a
mp;amp;#13;
Roman' size='3'> Home Builder
Files for Chapter
11
The nearly four-year-old
AmericaBuilt
Construction Inc. and its affiliate, AmericaBuilt Communities Inc., have
filed for chapter
11, the Arizona Daily
Star
size='3'>reported yesterday. The companies, which made $12 million in
sales last year, are
reorganizing in response to the housing market downturn, which has
resulted in fewer people
getting financing for new homes, the company said. The filings list as
creditors numerous
contractors owed as much as $238,000 for their work, as well as
individuals who have paid
deposits of up to $351,000 for homes under construction.
href='http://www.azstarnet.com/sn/printDS/178917'>Read
more.
Pushes Ahead on
Small-Firm Audit Rules
Securities and Exchange
Commission (SEC)
Chairman Christopher Cox isn't ruling out further delays in applying
stricter auditing
requirements on small public companies, but said during testimony before
a Senate committee
that such relief isn't the preferred option for regulators, the
Wall Street
Journal
reported today. Nearly 6,000 smaller public companies --
those with market
values of less than $75 million -- have yet to come under two
requirements adopted by
Congress in 2002 as part of the Sarbanes-Oxley Act. Regulators have
delayed applying that
portion of the law to smaller companies amid complaints that compliance
has been overly
costly and time-consuming for larger companies. In testimony yesterday
to the Senate Small
Business and Entrepreneurship Committee, Cox said the SEC and the Public
Company Accounting
Oversight Board, or PCAOB, which oversees accounting firms, are close to
finalizing changes
to make the requirement less burdensome for all companies, ending the
need to exempt smaller
href='http://online.wsj.com/article/SB117693790414974738.html?mod=us_business_whats_news'>Re
ad more. (Registration required.)
International
name='12'>Canada
face='Times




New
Roman'
size='3'> Pension Fund Plans More
Private Equity Deals
The Canada Pension Plan
Investment Board,
which said it is in talks to buy
w:st='on'>
w:st='on'>
size='3'>Canada's
biggest phone
company, plans to make additional private equity investments to bolster
returns, Bloomberg
News reported yesterday. The C$111 billion ($98 billion) retirement fund
leads an investor
group that opened talks with BCE Inc. to take the telephone company
private, in what would
be the second-biggest buyout ever. Caisse de Depot et Placement du
Quebec, the Public Sector
Pension Investment Board and New York-based Kohlberg Kravis Roberts
& Co. are also in
talks with BCE, which has a market value of about C$31
billion.
size='3'>Chief Executive Officer David Denison is seeking to expand
Canada Pension's C$9
billion private-equity and infrastructure portfolio, which includes
stakes in mattress maker
National Bedding Co. and chipmaker Freescale Semiconductor Inc., to
increase returns as
contributions rise. Assets under management may jump to C$350 billion by
2022, the
href='http://www.bloomberg.com/apps/news?pid=20601082&sid=anhTNG7wlgQI&refer=canada'
>Read more.
name='13'>TROUBLED COMPANIES
IN THE NEWS
1000’s of companies lose
money or experience
some form of difficulty each quarter.
The business news
articles below are taken
from the Daily Summary
of Troubled &
Fast Growing U.S. Companies and Other Business News
size='3'>published by
Bastien Financial Publications.
To begin receiving the COMPLETE
Daily e-Summary,
that emails you information on over 70 such companies each morning,
email
href='mailto:steve@creditnews.com'>
color='#0000ff'
size='3'>steve@creditnews.comyour name, company name, address, phone and
fax.
size='3'>We’ll set you up within 24 hours.
Receive an ABI
member’s discount of 50%
off the $500 annual subscription fee.
size='3'>Indicate “ABI CODE
27” in your email.
size='3'>Affordable
Residential Communities Inc., Englewood, Co.,
is in a definitive
deal to sell its mobile-home community operations to Farallon Capital
Management LLC of San
Francisco, Ca. for $1.8 billion, including cash and assumed debt. The
transaction must still
be okayed by shareholders. Affordable Residential recently
reported a 2006 net loss of
$27.7 million on revenue of $244 million.
size='3'>Badger Meter
Inc. of
w:st='on'>
face='Times New Roman' size='3'>Milwaukee
size='3'>,
size='3'>Wi. reported its
first quarter net
declined 39%–to $2.5 million. Sales declined 9%–to $52.6
million.
size='3'>Blair
Corp., a
w:st='on'>
face='Times New Roman' size='3'>Warren
size='3'>,
w:st='on'>
size='3'>Pa.
size='3'>retailer which sells everything form home products to apparel
through its catalogs
and stores, reported a wider first quarter net loss of $5.1
million–up from a loss of
$4.7 million for the same period one year earlier. Sales declined
25%–to $77.8
million.
size='3'>Borland Software
Corp., a
w:st='on'>
face='Times New Roman'
size='3'>Cupertino, Ca.
software and consulting firm, is relocating its headquarters to Austin,
Tx., as it seeks a
more “cost effective” environment in order to return to
profitability. Borland
has lost money in three of its past five years.
size='3'>Champion
Enterprises Inc., the Auburn Hills, Mi. firm
which is the
nation’s largest builder of manufactured homes, reported a first
quarter net loss of
$7.2 million. This compares with income of $13.6 million for the same
period one year
earlier. Sales declined 25%–to $260
million.
size='3'>General Motors
Corp.,
face='Times New Roman'
size='3'>Detroit, Mi., said that it
will pare its Belgian
operations by 1,400 jobs, as it seeks to focus on faster-growing markets
in
size='3'>India and
w:st='on'>
size='3'>China.
GM will try to sell
more cars in
size='3'>India, partly to
overcome weak sales
in
America, and also buy more parts from
Indian
manufacturers. Current plans call for the
w:st='on'>
face='Times New Roman' size='3'>U.S.
size='3'>carmaker to
double its capacity in
w:st='on'>
face='Times New Roman'
size='3'>India
size='3'>. In another overseas move, GM hopes to increase its growth
efforts in China, with
an aim to double production capacity at big factories in that market
within the next few
years.
size='3'>Linear Technology
Corp., a
w:st='on'>
face='Times New Roman'
size='3'>Milpitas, Ca.
maker of integrated circuits, reported its third quarter net income
declined 11%–$98.5
million. Revenue declined 9%–to $255
face='Times New Roman'
size='3'>million.
size='3'>Motorola
Inc., the giant
w:st='on'>
w:st='on'>
size='3'>Schaumburg
size='3'>,
size='3'>Il. firm which is
the second largest
maker of wireless handsets after industry leader Nokia, reported a first
quarter net loss of
$181 million. The loss, which compares with income of $686 million
for the same period
one year earlier, includes charges of $267 million. Sales declined
nearly 2%–to
$9.4 billion. The company, which also said its second quarter
sales would be flat,
expects to complete its payroll reduction, of 3,500 jobs, by 6/30.
It is hoped that
the cutbacks will save the company $400 million
annually.
size='3'>PPL
Corp., an
w:st='on'>
face='Times New Roman' size='3'>Allentown
size='3'>,
size='3'>Pa. utility
holding company,
announced that its international division is selling its Bolivian
electricity-delivery
business, along with a related construction operation, to an employee
group that was set up
by the Bolivian unit’s management. The value of the transaction
wasn’t
announced. PPL will take an impairment charge of up to $26 million in
the first quarter
related to the sale. PPL meanwhile continues its efforts to sell off
other Latin American
businesses.
size='3'>Priority Freight
Lines, a family-owned
w:st='on'>
w:st='on'>
size='3'>Sumner
size='3'>,
size='3'>Wa. firm, is
selling nearly all of
its assets, including equipment, accounts receivable and a service
center, to Old Dominion
Freight Line Inc. of
w:st='on'>
size='3'>Thomasville
size='3'>,
size='3'>N.C. for an
undisclosed
amount.
size='3'>Symmetricom
Inc., San Jose, Ca. will restate its financial
results for both
the quarter and six-month period ended 12/31, as a result of having
understated costs and
therefore overstating net income by $800,000.
size='3'>Vonage Holdings
Corp., caught up in patent litigation with
Verizon Communications
Inc., warned in a statement it filed with the Securities and Exchange
Commission that there
is a risk that the patent battle could force it into bankruptcy
protection. Recently a
federal jury ruled that the Holmdel, N.J. Internet phone firm infringed
on Verizon’s
patents. An upcoming hearing in an appeals court will determiner whether
Vonage can continue
signing up new customers as it appeals the infringement ruling. Vonage
recently said that it
would reduce its workforce by about 10% of its 1,800
employees.