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March 23, 2006
name='1'>Committees See Holes in Bankruptcy Code
Provision
Frustrated with gaping holes in
the Bankruptcy Code’s new information-sharing provision, the
official creditors’ committee of Riverstone Networks Inc. is the
latest group in a number of chapter 11 cases that has asked a bankruptcy
court judge to clear
up some of the ambiguities in the provision, according to
Portfolio Media
yesterday. Since the provision took effect in October
2005, similar clarification requests have been made by creditors
committees in several chapter 11 cases, including Calpine Corp., Refco
Inc., FLYi Inc., Amcast Industrial Corp., Musicland Holding Corp. and
World Health Alternatives Inc. The new provision requires the creditors'
committee to provide access to information to its constituents that are
not on the committee, but have claims of the same kind represented by
the committee. The provision also requires the committee to solicit and
receive comments from those constituents. The Riverstone committee has
asked the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Wilmington
w:st='on'>
size='3'>Del.
explain its responsibility to provide information to its constituents
and to ask for comments from them. Establishing standard
information-sharing procedures will help the committee, as well as its
constituents and Riverstone, according to the filing.
name='2'>Bankruptcy Judge Won't Erase Election-Law Fines for
Bankrupt Politicians
U.S. Bankruptcy Court
Judge Frank Alley III has ruled that
convicted former Oregon politicians Dan and Victoria Doyle don't
qualify for a chapter 13 bankruptcy reorganization because their debts
exceed the maximum allowed, the
size='3'>Salem (Ore.) Statesman Journal
size='3'>reported today. Judge Alley’s ruling means that the
Doyles won't be able to escape $130,000 in state elections-law fines by
declaring bankruptcy. The judge denied the Doyles' request to reorganize
all of their debts, which amounted to $290,000 plus the state fines.
Judge Alley ruled that the state fines count, even though they were
assessed after the Doyles filed for bankruptcy. That put the Doyle's
debt over the $307,000 cap allowed in chapter 13 filings. Judge Alley
granted the Doyles three weeks to re-file for bankruptcy using another
option. Dan Doyle is serving a 10-month sentence in
w:st='on'>
size='3'>Marion
face='Times New Roman'
size='3'>County
for falsifying campaign-finance reports from his 2002 and 2004 races for
the Oregon House of Representatives. His wife, Victoria Doyle, already
has served a 10-day sentence for falsifying a report in her unsuccessful
2004 race for
face='Times New Roman' size='3'>Marion
size='3'>County
size='3'>clerk.
href='http://www.statesmanjournal.com/apps/pbcs.dll/article?AID=/20060323/STA…'>Read
more.
FTC
Looks to Shut Down Debt Solutions Firms
The Federal Trade
Commission is asking a federal judge to shut down a group of companies
the Washington's attorney general had previously sued for marketing a
'debt elimination program' whose effectiveness was questionable and
whose salespeople used aggressive telemarketing tactics, the
Seattle
Post-Intelligencer reported
yesterday.
size='3'>After DSI Financial, Debt Solutions and their affiliates
settled with the Attorney General's Office in 2004, they apparently
stopped marketing to
w:st='on'>
size='3'>Washington
size='3'>residents but continued selling to the rest of the country. The
companies, which are incorporated in
face='Times New Roman' size='3'>Florida
size='3'>, had operated from
w:st='on'>
size='3'>Spokane
call center in
face='Times New Roman' size='3'>Federal
Way
more than $250,000 in refunds to Washington residents after they settled
with the state and have followed the agreement, said Don Kellman, their
Spokane-based attorney.
size='3'>The FTC and the
general filed a joint lawsuit in U.S. District Court in
size='3'>Seattle
Debt Solutions and its affiliates of violating telemarketing laws,
misrepresenting its business to consumers and failing to disclose
material conditions of its sales.
href='http://seattlepi.nwsource.com/business/263833_debtsolutions22.html'>Read
more.
Court
Throws Bankrupt Adelphia a Lifeline
As tensions continue to
roil Adelphia Communication Corp.’s reorganization plan, a
bankruptcy court has approved a financing deal to keep the cable
provider up and running,
size='3'>Portfolio Media reported yesterday. A
group of lenders led by J.P. Morgan Securities Inc. and Citigroup Global
Markets Inc. had provided the beleaguered company with a
debtor-in-possession loan, which was extended from the original maturity
date of March 31 to Aug. 7. The U.S. Bankruptcy Court in
size='3'>Manhattan
issued an order last Thursday saying that the $1.3 billion funding
package will cease on Nov. 7 if Adelphia hasn’t secured all
required government approvals and reconciled antitrust concerns related
to the sale of its cable properties. The cable provider’s chapter
11 plan is centered on the sale of its cable assets to the
country’s biggest cable operators, Time Warner Inc. and Comcast
Corp., for $17.6 billion in stock and cash. The $1.3 billion financing
deal includes an $800 million revolving credit facility, which consists
of a $500 million term loan and a $500 million letter of
credit.
name='5'>Bankruptcy Court Approves Trans World Purchase of 400-Store
Musicland Chain
Trans World Entertainment
Corp., which operates entertainment stores under banners like FYE and
Wherehouse, said its pending acquisition of bankrupt rival Musicland
Holding Corp. received bankruptcy court approval, the Associated Press
reported yesterday. The transaction, which is expected to close March
27, is valued at $104.2 million in cash plus $18.1 million in assumed
liabilities. Musicland, which filed for chapter 11 protection in
January, operates 400 entertainment stores mostly under the Sam Goody
and Suncoast Motion Picture Co. brand names. Trans World said it expects
to keep 335 of the stores and liquidate the rest through a joint venture
with Hilco Merchant Resources LLC. Trans World Entertainment said it
expects the acquisition to add to 2006 results.
href='http://www.moneysense.ca/news/mergers_acquisitions/shownews.jsp?content…'>Read
more.
Autos
name='6'>General Motors Will Offer Buyouts to All Its Union
Workers
General Motors reached a
landmark agreement with the United Automobile Workers intended to reduce
sharply the ranks of a generation of auto workers long envied by other
blue-collar workers for their wages and benefits, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. GM, staggering under the weight of $10.6
billion in losses last year, said it would offer buyouts and
early-retirement packages ranging from $35,000 to $140,000 to every one
of its 113,000 unionized workers in the
w:st='on'>
size='3'>United States
size='3'>who agreed to leave the company. At the same time,
size='3'>Delphi
automotive parts maker and a unit of GM until seven years ago, will
offer buyouts of $35,000 to 13,000 UAW members out of 24,000 on its
factory floors. For GM which is paying the full cost, the buyout offer
is an expensive way to persuade its workers and those at
size='3'>Delphi
accept the full pay and benefits they would ordinarily receive when
their plants closed or they were laid off. Analysts said the plan could
cost G.M. as much as $2 billion, depending on how many workers took part
in the buyout program.
href='http://www.nytimes.com/2006/03/23/business/23auto.html?_r=1&oref=slogin…'>Read
more.
In related news, analysts
say the plan yesterday to offer buyouts to thousands of hourly union
workers at beleaguered Delphi Corp. may not end the company's troubles
as the auto parts giant struggles to cut costs and emerge from
bankruptcy protection, the
size='3'>Washington Post reported today. Even
though the plan would trim
size='3'>Delphi
not avert further skirmishes with labor, analysts said. If most of the
targeted UAW workers take the buyouts, the union could still be fighting
deep pay cuts and possible plant closings. Gary Chaison, a
labor-relations professor at Clark University, said the three-way deal
-- it also includes buyouts at General Motors -- creates only a
short-term fix to the high labor costs that forced Delphi into chapter
11 bankruptcy protection in October.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/03/22/AR20060…'>Read
more.
name='7'>Hedge Fund Claims
face='Times New Roman' size='3'>Delphi
size='3'>’s Books Not That Bad
A hedge fund trying to
secure official representation for investors in the Delphi Corp.
bankruptcy proceedings has accused the company of using old records to
make its financial status look worse than it really is,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. Appaloosa Management L.P., one of the
biggest shareholders in the auto parts company with roughly 9 percent of
its stock, asked
size='3'>Delphi
a canceled shareholder meeting, and sought the appointment of an
official committee to represent shareholders. The hedge fund argues that
there will be excess funds left over for shareholders, despite
size='3'>Delphi
financial forecast. According to an expert hired by Appaloosa,
size='3'>Delphi
information that dates back to the summer of 2005. The expert contends
that newer data shows that the auto parts maker will have an equity
value of almost $6 billion and a 2006 EBITDA of $100 million, once cuts
in retiree and labor costs are factored in. Former Goldman Sachs Group
executive David Tepper heads up the investment fund.
w:st='on'>
size='3'>Delphi
claims that an equity committee isn’t necessary because the
company is totally bankrupt.
Smart
Papers Declares Bankruptcy
Paper products
manufacturer Smart Papers L.L.C. filed for bankruptcy late Tuesday, less
than a week after an affiliate abruptly closed a pulp and paper mill
in
size='3'>Park Falls
w:st='on'>
size='3'>Wis.
Milwaukee Business Journal reported yesterday. Smart Papers,
based in
face='Times New






Roman'
size='3'>Hamilton
w:st='on'>
size='3'>Ohio
chapter 11 reorganization with the U.S. Bankruptcy Court for the
District of Delaware, the firm said Wednesday.
size='3'>Smart Papers said it has filed motions with the bankruptcy
court seeking immediate relief to ensure that the company continues
operating. It plans to continue operating its
w:st='on'>
size='3'>Hamilton
w:st='on'>
size='3'>Ohio
its
size='3'>Calif.
distribution center. PF Papers will also continue to operate a
distribution center in
w:st='on'>West
Chicago
w:st='on'>
size='3'>Ill.
also acquired from Fraser Papers.
size='3'>
href='http://milwaukee.bizjournals.com/milwaukee/stories/2006/03/20/daily16.h…'>Read
more.
w:st='on'>
name='9'>Bankruptcy Judge Clears
Way
size='3'> for Robert Blake to Seek New Civil
Trial
Bankruptcy Judge
Geraldine Mund cleared the way today for Robert Blake's
lawyers to seek a new trial of a wrongful death lawsuit that resulted in
a judgment of $30 million against him, the Associated Press reported
yesterday. Judge Mund vacated a stay of proceedings that normally
follows the filing of a bankruptcy claim such as the one by Blake last
month. Judge Mund acknowledged that Superior Court Judge David Schacter
signed the official entry of judgment in the civil case after Blake's
bankruptcy filing because he was out sick for several months after the
November verdict in the lawsuit. But she said that was only a
technicality, and that Schacter would have signed it on time if he was
not ill. Blake's bankruptcy lawyer David Weinstein did
not oppose the judge's plan to vacate all stays in the case until the
civil matters are resolved.
href='http://www.fox6.com/news/state/story.aspx?content_id=B8942F23-BB05-4E08…'>Read
more.
name='10'>Unisys Pulls Plug on Pension Plan
Unisys said that it will
end its traditional pension plans for its
w:st='on'>
size='3'>U.S.
size='3'>employees at the end this year in an effort to reduce costs,
TheStreet.com reported yesterday. At the same time, Unisys will boost
its matching contributions to the defined-contribution retirement
savings plan starting Jan. 1, 2007. The change will help save the
company $700 million over the next decade, on the basis of current
interest rates and actuarial assumptions, Unisys said. The Blue Bell,
Pa., information technology company also expects pension costs to drop
to $168 million this year from $181 million in 2005. The move won't
affect retirement benefits that employees have already earned as of Dec.
31, 2006, as long as they are vested when their employment ends.
href='http://www.thestreet.com/pf/tech/software/10275110.html'>Read
more.
name='11'>Concerns Raised over New
w:st='on'>
size='3'>Mortgage Lending Law
A recently passed
mortgage lending law in Illinois, which will be effective in July, has
mortgage professionals concerned about the privacy of their
client’s financial information, the Rockford River Times (Ill.)
size='3'>reported today. Gov. Rod Blagojevich (D-Ill.) and Illinois
House Speaker Michael J. Madigan (D-Chicago) pushed the passage of the
law, saying that ample evidence exists that predatory lending practices
by mortgage brokers are the cause of high rates of foreclosures
in
size='3'>. The new law aims to crack down on dishonest brokers by
requiring mandatory credit counseling for applicants with properties in
select Cook County ZIP codes. To enforce the legislation, the Illinois
Department of Professional Regulation will be directed to establish and
administer a database that will require mortgage brokers and title
insurance companies to submit information about loan applicants,
including consumer debt obligations and salary information. Once in the
database, the information will be compared with credit counseling
standards that have yet to be determined by the state. Loan applicants
will then be notified if the department feels the loans may be too
risky, while all of their information will remain in the
database.
href='http://www.rockrivertimes.com/index.pl?cmd=viewstory&cat=2&id=12747'>Read
more.
name='12'>Jury Told Lay Lied on Enron
Ben F. Glisan Jr.,
Enron's former treasurer, delivered stinging testimony on Wednesday that
contradicted Kenneth L. Lay’s claims that he had been unaware of
the company's crumbling financial picture and had not known about some
of the illicit side deals involving top managers, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. In a full day of questioning by prosecutors,
Glisan said that Lay had lied to credit-rating agencies, employees and
Wall Street analysts about the company's performance and need for more
urgent action, even as he participated in internal discussions with
managers about what to do about Enron's 'dire' financial situation.
Glisan described one previously undisclosed meeting in which, he said,
Lay had refused to accept his resignation when he admitted making a $1
million profit in a kickback scheme set up by a former chief financial
officer, Andrew S. Fastow. Lay's response, Glisan testified, had been
that his participation in the scheme, known as the
w:st='on'>
size='3'>Southampton
and that it would be the 'worst' time for him to resign.
href='http://www.nytimes.com/2006/03/23/business/businessspecial3/23enron.htm…'>Read
more.
International
name='13'>Ernst & Young Ordered to Pay Compensation in Norwegian
Bankruptcy Case
Global accounting group
Ernst & Young was ordered Tuesday to pay 100 million kroner (US$15.4
million; euro12.5 million) in compensation to a Norwegian bank in a
bankruptcy case, the Associated Press reported yesterday. The Nordic
banking group Nordea sued the Norwegian branch of the accounting group,
Ernst & Young AS, saying its audits of the Norwegian sports
sponsorship group Sponsor Service ASA did not show that the company was
on the verge of bankruptcy. Sponsor Service
went bankrupt in 2003 with total debts of 568 million kroner, (US$87.4
million; euro71 million), including more than 200 million kroner (US$30
million; euro25 million) owed to Nordea. The bank sued Ernst and Young
for roughly that amount, saying it would not have lent money to Sponsor
Service if its correct financial state had been known. In a ruling
released Tuesday, the
w:st='on'>
size='3'>Oslo
court ordered Ernst & Young to pay about half that amount, saying
the bank also made mistakes when evaluating Sponsor Services'
creditworthiness.The
court said Ernst & Young had failed to fulfill its duty 'under the
accounting law to assess the risk of there being incorrect information
in an annual report.'
href='http://accounting.smartpros.com/x52293.xml'>Read
more.
name='14'>Portus Fund Investors Can Recover Money Outside of
Bankruptcy
Ontario Superior Court
Judge Colin Campbell said that Portus Alternative Asset Management Inc.
customers who invested in the defunct hedge fund's Market Neutral
Preservation Fund won't have to file bankruptcy claims to recover their
money, Bloomberg News reported yesterday. Judge Campbell ruled that
Market Neutral Preservation Fund investors, who made deposits totaling
C$19.2 million ($16.5 million), are entitled to their money now because
the funds were separated from the rest of the assets. The judge is
scheduled to rule tomorrow on KPMG LLP's request to place Portus and its
subsidiaries into bankruptcy. Placing Portus in bankruptcy will let a
trustee liquidate the investments and distribute the money among the
eligible creditors. Treating one group of creditors differently is
unusual, the judge said. 'I would hope that the circumstances in which a
claim such as that of the MNPF investors would arise would be
infrequent,''
face='Times New Roman' size='3'>Campbell
said in his 18-page ruling.
href='http://www.bloomberg.com/apps/news?pid=10000082&sid=aqv2renqYxao&refer=…'>Read
more.