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August 16, 2006
Judge
Rules for Insurers in Katrina Flood Claims
A federal judge in
size='3'>Mississippi
with home insurance companies yesterday and ruled that they did not have
to pay for the flooding that destroyed tens of thousands of homes in
Hurricane Katrina, the
size='3'>New York Times reported today.
Insurers have already paid $17.6 billion for damage to homes from
Katrina that was attributed to wind only. The ruling was a victory for
the companies as they could have been forced to pay out billions more if
they had been required to cover damage from flooding caused by the
storm. It upholds a longstanding practice of insurers of not covering
flood damage, which is typically insured through the federal
government. However, the judge rejected
attempts by the insurers to cancel coverage for wind damage when it
occurred in combination with the flooding. The insurance industry had
argued that a ruling requiring insurers to pay all flood damage would
have meant that their policies or contracts could be rewritten by the
courts, and might have led some of them to withdraw from the home
insurance business.
href='http://www.nytimes.com/2006/08/16/business/16insure.html?_r=1&oref=slog…'>Read
more.
Autos
face='Times New Roman' size='3'>
name='2'>Delphi
size='3'> Posts $2.6 Billion First-Half
Loss
Delphi Corp., the
nation's largest auto supplier, said that it lost $2.6 billion in the
first half of 2006, due largely to the cost of employee buyout and early
retirement packages, the Associated Press reported yesterday. The loss
was more than three times the $741 million that
w:st='on'>
size='3'>Delphi
of 2005. The loss in the first half included about $1.9 billion in
charges related to buyouts and early retirements. Chief Financial
Officer Robert Dellinger said the acceptance rate for the buyouts and
retirement incentives among employees represented by the United Auto
Workers was 85 percent.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/08/15/AR20060…'>Read
more.
In related news, Delphi said
that it agreed to extend the Securities and Exchange Commission’s
investigation of the company from its original date in April to Oct. 31,
Portfolio Media reported yesterday. The SEC, which has been
investigating the company’s accounting practices since 2004, faced
a possible end to a five-year statute-of-limitations penalty. In 2004,
Delphi began an internal investigation of its accounting practices,
which was subsequently taken over by the SEC and the Federal Bureau
of Investigation. Delphi said that it improperly accounted for $237
million in cash payments for warranty claims to General Motors, among
other errors.
name='3'>Collins & Aikman’s Creditors Request
Investigation
The creditors’
committee for Collins & Aikman Corp. is looking to investigate Ford
Motor Co. and General Electric Capital Corp. for potential contract
interference after their attempts to acquire the bankrupt auto parts
supplier’s
face='Times New Roman' size='3'>Hermosillo
plant,
size='3'>Portfolio Media reported yesterday.
In a motion filed Friday with the U.S. Bankruptcy Court in
size='3'>Detroit
unsecured creditors’ committee asked a judge for permission to
conduct an examination and obtain documents from Ford Motor Co., General
Electric Capital Corp. and its subsidiary GE Mexico. That information
would help the committee decide if GE, after it threatened to foreclose
upon Collins & Aikman’s assets, then assisted or encouraged
Ford to take any action with respect to the plant. The committee also
wants to find out if Ford encouraged GE to initiate foreclosure
proceedings so that it could purchase the
w:st='on'>
size='3'>Hermosillo
from GE after the foreclosure.
name='4'>Meridian Scores Extension of Exclusivity
Periods
Less than a month after a
federal bankruptcy judge approved Meridian Automotive
face='Times New Roman'>Systems Inc.’s third amended
disclosure statement, the auto parts maker won court approval for an
extension to its exclusive filing and solicitation periods,
Portfolio Media
reported yesterday. Judge
size='3'>Mary Walrath of the
w:st='on'>
size='3'>U.S.
size='3'>Bankruptcy Court for the District of
face='Times New Roman'>
size='3'>Delaware
order on Monday, extending
w:st='on'>
size='3'>Meridian
exclusive filing period by an additional 61 days through Sept. 30 and
its exclusive solicitation period by an additional 61 days through Nov.
30. The move comes three weeks after Judge Walrath approved
Meridian’s third amended disclosure statement, clearing the way
for the auto parts maker to offer up the plan to creditors for a vote. A
confirmation hearing is scheduled for Sept. 13 in bankruptcy
court.
name='5'>Armstrong Approved for Bankruptcy Exit
A federal judge has cleared the
way for the confirmation of Armstrong World Industries Inc.'s bankruptcy
reorganization plan, allowing the flooring, ceiling and cabinet maker to
emerge from chapter 11 protection sometime in the fourth quarter,
Reuters reported yesterday. In his decision yesterday, U.S. District
Judge Eduardo Robreno rejected complaints by unsecured creditors that
Armstrong World's recovery plan discriminated against them by allowing
people with asbestos injuries to recover too much. Armstrong World, the
main operating unit of Armstrong Holdings Inc., said a formal order
confirming its reorganization plan should follow soon. The company
expects to emerge from chapter 11 after nearly six years.
href='http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=200…'>Read
more.
Chief
Executive Resigns at Tanner & Haley
Rob McGrath, a pioneer of
the 'destination club' industry, resigned as chief executive officer of
Tanner & Haley Resorts yesterday, less than one month after the
company filed for bankruptcy protection, the
size='3'>Wall Street Journal reported today.
McGrath, a former trader at J.P. Morgan Chase & Co. and Nomura
Holdings Inc., started the first destination club in 1998, offering a
unique way for the wealthy to vacation. Also yesterday,
size='3'>ankruptcy Judge Alan Shiff approved a $12.2 million company
credit arrangement that will allow Tanner & Haley to continue to
meet certain expenses.
href='http://online.wsj.com/article/SB115569725508636986-search.html?KEYWORDS…'>Read
more. (Registration required.)
name='7'>Gaines Inc. Files for Bankruptcy
J. Gordon Gaines Inc.,
the Vesta Insurance-owned unit that manages the company's numerous
insurance subsidiaries and employs the headquarters workers, filed for
chapter 11 last week in the U.S. Bankruptcy Court in Birmingham,
Ala., the
size='3'>Birmingham News reported today. The
Birmingham-based company listed assets of $1 million to $10 million and
debts of $10 million to $50 million in its filing. Gaines Inc. earned
fees from Vesta's insurance subsidiaries for management services, then
passed them along to the publicly traded parent company Vesta as
dividends.
href='http://www.al.com/business/birminghamnews/index.ssf?/base/business/1155…'>Read
more.
w:st='on'>
name='8'>Houston
w:st='on'>
size='3'> Art
face='Times New Roman'
size='3'>Gallery
face='Times New Roman' size='3'> Files for
Bankruptcy
Hart Galleries, a
Houston-based art gallery, has filed for chapter 11 bankruptcy,
the Houston
Chronicle reported today. According to court
documents, assets are estimated at $500,000 to $1 million with debts of
$1 million to $10 million. Hart's attorney, Richard Fuqua II of Fuqua
& Keim, estimates there may be as many as 400 unsecured creditors,
including banks, vendors and private interests that are owed amounts
ranging from $27,555 to $232,350.
href='http://www.chron.com/disp/story.mpl/business/4120023.html'>Read
more.
name='9'>Financially Strapped State Fairs Arrive at
Crossroads
Attendance has dropped
sharply at state fairs across the country in recent years, and many
states have either bailed out the events with emergency funding or have
sought to abolish the fairs, the
size='3'>New York Times reported
today. In
w:st='on'>
size='3'>Colorado
Bill Owens (R) signed a bill in June to rescue the state fair
from its mounting debt with $4 million from the state. Facing the
possibility of bankruptcy,
w:st='on'>
size='3'>Nebraska
to a bailout in 2004, with voters agreeing to a constitutional amendment
to direct lottery winnings to prop up its fair. Though critics say that
slipping attendance and increasing subsidies show that fairs have lost
their role in an era in which entertainment can be found almost around
every corner, defenders say the fairs are still important, as they teach
about farming and industry, and stir a sense of community.
href='http://www.nytimes.com/2006/08/16/us/16fair.html?pagewanted=print'>Read
more.
href='http://www.nytimes.com/2006/08/16/us/16fair.html?pagewanted=print'>