src='/AM/Images/headlines/headline.gif' />
April 5, 2005
Supreme Court Rules IRAs Protected in Bankruptcies
The Supreme Court ruled yesterday, in
href='/pdfs/supremeira.pdf'>Rousey v.
Jacoway, (PDF) that creditors may not seize Individual Retirement
Accounts (IRAs) when people file for bankruptcy. The unanimous decision
sides with a bankrupt Arkansas couple fighting to keep about $55,000 in
retirement savings, the Associated Press reported. As a result, IRAs now
join pensions, 401(k)s, Social Security and other benefits tied to age,
illness or disability that are afforded protection under bankruptcy law.
Read an
href='http://abiworld.net/crackingthecode/index.php?p=21'>ABI
Cracking the Code article on the decision by Mark P. Williams
of Norman, Wood, Kendrick & Turner (Birmingham, Ala.).
In other action yesterday, the Court granted certiorari in
Central Community College of Virginia v. Katz , No.
04–885. The question presented is “May Congress use the
Article I Bankruptcy Clause, U.S. Const. art. I, §8, cl. 4, to
abrogate the States’ sovereign immunity?” The case involves
the recovery of a preferential transfer from a state entity. This may
provide an opportunity for the court to revisit an issue not reached by
its 2004 opinion in Tennessee Student Assistance v.
Hood.
Bankruptcy Bill Is Set to Clear Final Hurdle With House Vote
A new bankruptcy law that would make it harder for consumers to walk
away from their debts is expected to clear the last hurdle to enactment
with a House vote this week, the Wall Street Journal
reported. To assure passage, the House doesn’t plan to consider
new amendments during a few hours of scheduled debate before the final
vote, the newspaper reported. Read the full article at
href='http://www.wsj.com/'www.wsj.com (subscription required).
Grassley Looking to Move Broader Pension Bill This Year
Senate Finance Chairman Charles Grassley (R–Iowa) is revamping
pension legislation, planning to reintroduce a broader version aimed at
tightening pension funding rules and boosting employee retirement
savings, CongressDaily reported. Work on the legislation,
which will be based on Grassley’s “NESTEG” retirement
bill, has picked up in the last few weeks, staffers and lobbyists said.
A Senate Finance Committee staffer said the revised bill will include
broader changes in pension funding rules than his previous version, the
newswire reported.
Pension Agency Braces for Car Trouble
A Wall Street Journal article points out that as
auto-industry funds for retired workers run short, government could
inherit plans. “Beyond the airline industry, the insurance program
faces tremendous exposure from the auto sector,” says Bradley
Belt, executive director of the PBGC, the online newspaper reported. The
agency says the pension assets of auto makers and parts companies fall
short of the pension promises they have made to workers by $45 billion
to $50 billion—more than the $31 billion shortfall in the airline
industry’s pension plans.
Insurance Firms Withdraw Support for Asbestos Fund
In a major setback for asbestos legislation, more than a dozen
insurance companies dropped their support for a $140 billion federal
trust fund to pay claims stemming from related lawsuits, the Wall
Street Journal reported. This makes it less likely that Congress
will approve asbestos legislation, leaving hundreds of U.S. companies
unsure how much money they owe in asbestos claims. Though limiting
asbestos lawsuits remains a priority for many U.S. businesses, the
insurers joined conservative Republicans and an increasing number of
corporations that believe the trust fund would be too large and
wouldn’t adequately limit their liability, the newspaper reported.
Read the full article at www.wsj.com
(subscription required).
Airlines Face Losses of $5.5 Billion on High Oil Prices
The global airline industry could lose $5.5 billion (£2.9bn) in
2005 because of continuing high crude oil prices, according to a warning
on Monday by Giovanni Bisignani, chief executive of the International
Air Transport Association, the Financial Times reported.
The total losses by the world’s airlines in the five years from
2001–05 would then exceed $40 billion.
U.S. Seeks Enron Fraud Trial for Lay by June
The Justice Department’s Enron Task Force filed a motion in
Houston federal court seeking to try former Enron Corp. Chairman and
Chief Executive Kenneth Lay either next month or in June on bank-fraud
charges that were part of the indictment filed against him, the
Wall Street Journal reported. The charges involve allegedly
false statements Lay made to banks in connection with loans he
obtained.
Krispy Kreme Gets $225 Million, Cash Crunch Alleviated
Krispy Kreme Doughnuts Inc. on Monday said it received a $225 million
loan that will help the struggling doughnut chain avert a cash crunch
and quell the threat of bankruptcy, Reuters reported. The financing,
which will be used to pay back about $90 million owed under Krispy
Kreme’s existing credit facility, was arranged by Credit Suisse
First Boston and hedge fund Silver Point Finance LLC, the company said
in a statement.
AaiPharma Likely to File Chapter 11
Drugmaker AaiPharma Inc. said on Monday it is highly likely that it
will seek chapter 11 bankruptcy protection, after failing to make
interest payments on some corporate debt on April 1, Reuters reported.
Shares of the company, which makes pain drugs, plummeted 20 percent on
the Nasdaq. The company said it has continued discussions with advisers
on a potential restructuring and has agreed to a three-week exclusivity
period for a third party that is considering buying certain AaiPharma
assets.
ATA Wins Court OK for Chicago Express Sale
ATA Holdings Corp., parent of bankrupt ATA Airlines, won approval
from a federal bankruptcy judge on Monday to sell its regional carrier,
Chicago Express, to Okun Express Inc., Reuters reported.
Indianapolis-based ATA, in bankruptcy since October, said last week that
it had selected Okun as the highest and best bidder for Chicago
Express.
Judge Sets $7 Billion Owens Corning Asbestos Liability
A U.S. judge has ruled that building materials company Owens Corning
owes a potential $7 billion to thousands of people sickened or killed by
asbestos used to insulate pipes in homes and offices, Reuters reported.
The estimate, determined by U.S. District Judge John Fullam last week,
is a crucial step in the company’s emergence from chapter 11
bankruptcy, which began more than four years ago.