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December 30, 2005
name='1'>Congress May Take until March to Raise U.S. Borrowing
Limit
The U.S. Congress may not act on President George W. Bush’s
request for more borrowing authority until early March, which would
force the Treasury to use unusual measures such as shuffling money among
government pension funds to finance operations, Bloomberg News reported
today. Treasury Secretary John Snow told Congress yesterday that the
government may reach its statutory borrowing limit of $8.18 trillion by
mid-February, and asked lawmakers to raise the debt ceiling “as
soon as possible.” Congress is unlikely to act “before the
end of February or early March,” Representative John M. Spratt
Jr., the top Democrat on the House Budget Committee, said in an
interview.
href='http://www.bloomberg.com/news/economy/politics.html'>Read
more.
id='2'>Credit Card Debt Down 11.4%, Bankruptcy the Cause?
A new survey says the average U.S. consumer carried 11.4 percent
less credit card debt this year, but industry experts say it might not
be entirely because people were thriftier, the Milwaukee
Journal-Sentinel reported yesterday. Myvesta, a Rockville, Md.,
consumer education organization, said yesterday that its annual survey,
conducted in early November, showed the average American had a credit
card balance of $2,328, down from $2,627 in 2004. The survey also found
the average consumer had about three credit cards in his or her wallet,
the same as in 2004. Indebted consumers, fearing that a change in
bankruptcy law in mid-October would make it harder to have their
financial obligations erased in court, filed what will turn out to be a
record number of bankruptcies in the U.S. in the calendar year 2005. In
its fiscal year ended Sept. 30, courts recorded almost 1.8 million
bankruptcy filings, a record.
href='http://www.jsonline.com/bym/news/dec05/381320.asp'>Read
more.
id='3'>Layoffs, Bankruptcy Predicted for Mass. City
Springfield, Mass., officials say bankruptcy and more than 1,000
layoffs are likely if the state refuses to give the city more money to
avoid a deficit that could balloon to $70 million in the next six years,
the Associated Press reported yesterday. City Councilor Timothy
Rooke’s year-long term on the control board overseeing
Springfield’s finances expires next week. He said that the city
could be forced to hand pink slips to as many as 500 teachers and
another 800 city employees during the next several years. A recent
ruling by Superior Court Judge Constance Sweeney found that Springfield
illegally withheld raises for teachers three years ago. Sweeney is
expected to decide next month exactly how much the city owes its
teachers, who say they’re entitled to all negotiated raises that
have been frozen since the 2004 fiscal year. Lawmakers have repeatedly
said the city is not likely to receive more state aid.
href='http://www.boston.com/news/local/massachusetts/articles/2005/12/29/layoffs_bankruptcy_predicted_without_more_aid_for_springfield/'>Read
more.
id='4'>N.Y. Die Maker Declares Bankruptcy
Bruno Machinery Corp., a family-owned, Troy, N.Y., mold and die
manufacturer, has filed for bankruptcy, UPI reported yesterday. The
39-year old company, which employs about 80 people, manufactures
die-cutting, embossing and molding machines, as well as heat-sealing
presses. Bruno has assets of less than $50,000 and owes the following
amounts: $433,622.27 to Kenweld, a Worcester, Mass., company;
$420,049.18 to Unified Holdings of Albany; $300,000 to Joao Raquel
through Unified Holdings; and $214,213 to Applied Industrial
Technologies of Chicago. The company filed for creditor protection
Wednesday in Albany, N.Y.
id='5'>Central Valley Scrip Co. to File for Bankruptcy
Scrip Advantage Inc. of Fresno, Calif., said yesterday that it will
file for chapter 11 bankruptcy protection in an effort to “salvage
the business for the benefit of all of its creditors and, to the extent
possible, its shareholders,” the Central Valley Business
Times reported yesterday. The company expects to file in early
January 2006. Scrip Advantage buys gift certificates ("scrip")
in bulk, which it then sells at a discount to face value to non-profit
organizations, primarily parochial schools and sports leagues. The
company has claimed almost 4,000 non-profit
organizations—churches, schools, sport leagues and community-based
organizations—as its customers. Scrip Advantage reportedly owes
money to PTAs, church groups and other nonprofits. That money came from
deposits made by the nonprofits.
href='http://www.centralvalleybusinesstimes.com/stories/001/?ID=1040'>Read
more.
Asbestos
Need of Reform?
Senate Majority Leader Bill Frist has labeled the Fairness in
Asbestos Injury Resolution (FAIR) Act as a priority for 2006, an opinion
piece in the Muskogee Phoenix said yesterday. Frist has
recognized that victims can no longer suffer under the current asbestos
litigation system, and he understands a solution is needed. In a system
of more than 300,000 claims, it‚s no wonder the courts have become
so bogged down that victims wait years for even a day before a judge.
href='http://www.muskogeephoenix.com/apps/pbcs.dll/article?AID=/20051229/OPINION/51228028/1014'>Read
more.
id='7'>Judge Backs Revised Babcock & Wilcox Plan
A federal judge has
backed a revised reorganization plan for McDermott International
Inc.’s subsidiary Babcock & Wilcox Co., a key step toward
ending the unit’s nearly six years of bankruptcy-law protection,
the Associated Press reported yesterday. Babcock & Wilcox, which
makes industrial boilers and power generation systems, filed for chapter
11 protection in 2000 because of asbestos-related lawsuits. New
Orleans-based energy-services giant McDermott said Thursday that
following a full review, Judge Jerry Brown at the U.S. Bankruptcy Court
of the Eastern District of Louisiana recommended on Wednesday that the
plan go forward. The plan now includes a $7.5 million settlement with
Citgo Petroleum Corp., PDV Midwest Refining LLC and other insurers that
had objected to an earlier reorganization proposal.
href='http://www.nytimes.com/aponline/business/AP-Babcock--Wilcox-Bankruptcy.html'>Read
more.
id='8'>California Parties Seek to Enforce Calpine Contracts
Two of the biggest players in the California energy market have filed
papers with a New York bankruptcy court seeking to block Calpine Corp.
from using its insolvency to get out of power-supply contracts, Reuters
reported yesterday. Calpine, in one of its first motions in bankruptcy
court, sought the authority to reject eight "financially burdensome
and unprofitable" contracts, under which it said it would lose $1.2
billion over their remaining terms. Both Southern California Edison, a
unit of Edison International Inc., and the California Department of
Water Resources (CDWR) filed papers with the court on Wednesday seeking
more time for research and interviews, and more hearings on whether
Calpine could reject certain contracts.
href='http://www.nytimes.com/reuters/business/business-utilities-calpine.html'>Read
more.
In related news, the pay package for the Calpine’s new chief
executive appears relatively lucrative, bankruptcy experts said this
week, though they also added it is ultimately likely to be approved in
court, Reuters reported yesterday. On Tuesday, Calpine said it would pay
Robert May $1.5 million a year, plus bonuses that could reach $3 million
a year, as well as a $12 million "success fee" if the
bankruptcy court confirms a reorganization plan while May is CEO or
within 12 months of his leaving. "The only thing I see there that
is really questionable is the $12 million success fee. Success is almost
assured," said Lynn LoPucki, a bankruptcy expert
and professor of law at the University of California-Los Angeles.
href='http://www.nytimes.com/reuters/business/business-utilities-calpine-compensation.html'>Read
more.
Airlines
Future of Pensions
Concerns Delta Pilots
The deep pay cuts
pilots at bankrupt Delta Air Lines have accepted may be the least of
their worries: their retirement benefits are in jeopardy as well, the
Associated Press reported yesterday. Union leaders say that in the
lead-up to approving another round of salary cuts on Wednesday,
Delta’s 6,000 pilots expressed serious concerns that the
nation’s third-largest carrier would next seek to terminate their
pension plan. The union wants Delta to credit toward a comprehensive
concessions package the sides work out the amount the airline has not
paid to the pilots’ pension plan since filing for bankruptcy in
New York on Sept. 14. Union spokesman John Culp said that Delta missed
$145 million in qualified pension contributions on Oct. 15 and has been
refusing to pay roughly $7 million a month in nonqualified pension
contributions.
href='http://www.nytimes.com/aponline/business/AP-Delta-Pilots.html'>Read
more.
id='10'>Flyi Tells Workers It Could Close Jan. 7
Flyi Inc, the parent company of Independence Air, will cease
operating Jan. 7 if it is unable to find a major investor or buyer, the
airline said in a letter received by its employees this week, the
Washington Post reported yesterday. In the letter to its
unionized workers, including pilots, flight attendants and mechanics,
the Dulles-based airline said that without "significant external
investment," it would stop flying in 10 days and lay off workers at
all of its locations from Jan. 7-21. The airline mailed the letter to
comply with labor agreements requiring it to serve notice of intent to
furlough its workers. The carrier employs 2,800 people. Despite the
letter, Independence spokesman Rick DeLisi said that the airline’s
fate was far from sealed and that the carrier still had a "number
of ongoing discussions" and was still "exploring" a
number of options.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/12/28/AR2005122801360.html'>Read
more.
id='11'>Era Files for Chapter 11
Alaska’s largest commuter air carrier, Era Aviation, has filed
for chapter 11 protection, KTUU-TV reported yesterday. The action was a
result of a dispute with its lender, according to a statement on the
company’s Web site. Era President and CEO Paul Landis stated,
“Era is not in default of its payment obligations to the lender,
but certain financial benchmarks agreed by the lender and Era’s
owners were allegedly not met and that triggered the lender to take the
actions that have limited Era’s cash flow.” Era disputes the
lender’s claims. In 2004, SEACOR Holdings Inc. bought Era from
Rowan Companies. Then, this year, a group of California-based investors
bought the commuter air service. According to the company’s Web
site, Era employs about 500 Alaskans. During the reorganization, Era
says it plans to operate its full schedule, honor tickets and
reservations, pay all of its employees and venders and make normal
refunds.
id='12'>Asarco Bankruptcy Affected Tax Rolls, Former
Employees
Asarco, which owns the idled lead smelter in East Helena, Mont.,
missed tax payments to Lewis and Clark County, and remains about
$300,000 in arrears, according to Lewis and Clark County tax records,
the Helena Independent Record reported today. The company
bounced a $153,375 check for past due taxes, written the day the company
declared itself bankrupt, and failed to make this year’s tax
payment. The bankruptcy also affected disabled former Asarco employees,
who had been receiving payments from the company’s general fund.
That fund was frozen by the bankruptcy, but the Texas judge overseeing
Asarco’s restructuring later agreed to allow the payments to
resume.
href='http://www.helenair.com/articles/2005/12/30/helena/a01123005_03.txt'>Read
more.
International
U.K. House Prices
Rise for Fourth Month; Average Home Costs Over $271,000
U.K. house prices rose for a fourth month in December, the
Nationwide Building Society said, adding to evidence of a sustained
pickup in the $6 trillion property market, Bloomberg News reported
today. The average cost of a home gained 0.5 percent to £157,250
from November, which was revised to show an increase of 0.3 percent,
Britain’s third-biggest mortgage lender said today. The annual
rate of house-price increases accelerated to 3 percent, up from a
nine-year low of 1.8 percent in September.
href='http://www.bloomberg.com/news/economy/economies.html'>Read
more.