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Tort Reform Could Split House Asbestos Fix
A rift over tort reform between two House members working to craft a
bipartisan asbestos litigation bill could split the House asbestos fix,
CongressDaily reported. Much of the recent focus regarding
asbestos reform has been on the Senate, where Judiciary Committee
leaders are attempting to forge a legislative consensus, and where
Senate Budget Chairman Don Nickles
(R-Okla.) already has introduced legislation. However, legislation to
address the asbestos litigation crisis gained its earliest traction in
the House, where the Asbestos Alliance last year found its legislative
champions in Reps. Chris Cannon (R-Utah) and Calvin Dooley (D-Calif.).
Reps. Cannon and Dooley advocated the Alliance's proposal for a bill
that uses medical criteria to restrict the right of plaintiffs that are
ill from asbestos exposure to sue, and, up until several weeks ago, the
two were expected to introduce a unified, bipartisan bill in the House.
More recently, however, Reps. Cannon and Dooley have been pursuing
separate legislative tracks over a split in opinion about 'how far' to
take the bill in the area of tort reform. So, while the two legislative
offices are still working and communicating with one another, 'right
now, we're looking at a two-bill approach in the House,' one source
said, reported the newswire.
Mortgage Payments Are on Time, But Job Market May Change
That
Fewer homeowners were late paying their mortgages in the final quarter
of 2002, but economists worry that a worsening jobs market could be
making that more difficult now, the Associated Press reported. The
seasonally adjusted percentage of mortgage payments 30 or more days past
due for all home loans dipped to 4.53 percent in the fourth quarter of
last year, down from 4.66 percent in the third quarter, the Mortgage
Bankers Association of America reported on Monday. Decades-low mortgage
rates are helping homeowners handle their mortgage debt, economists say,
reported the newswire. Still, Doug Duncan, chief economist at the
Mortgage Bankers Association of America, said he's concerned about the
impact the recent deterioration in the labor market will have on
home-mortgage delinquency rates. If house prices continue to slow, the
job market gets worse and the economy doesn't pick up, 'That will make
it more difficult for households to work out troubled loans,' he said,
reported the newswire.
HEALTHSOUTH
HealthSouth Director Quits After Just 2 Weeks on Board
A corporate director of HealthSouth Corp. who was heading up an internal
investigative committee resigned on Monday after just two weeks on the
board of the beleaguered health-care company, the Associated Press
reported. The company said Director Betsy S. Atkins, who was appointed
to the board on March 7, had quit. Her departure came less than a week
after her March 19 selection to chair the board's special committee
investigating a financial mess at the company, the latest to be hit by
official allegations of accounting fraud. Jon F. Hanson, chairman of
Hampshire Cos., a real-estate investment firm in New Jersey, will
succeed Atkins on the investigative committee, reported the
newswire.
HealthSouth Faces Shareholder Suit
HealthSouth Corp. is facing a shareholder lawsuit over recent
allegations that the company and its chief executive committed massive
accounting fraud, Dow Jones reported. The company's New York Stock
Exchange-listed shares have been halted since last week, when the
Securities and Exchange Commission (SEC) filed a civil fraud suit
against the company and Chief Executive Richard Scrushy for allegedly
inflating the company's earnings by $1.4 billion since 1999. In a press
release on Monday, the law firm Schiffrin & Barroway LLP said it
filed the lawsuit on the behalf of all HealthSouth stock purchases made
between Feb. 25, 1998 and March 19, 2003, the day the SEC filed its
action against the company and Scrushy in the U.S. District Court for
the Northern district of Alabama, reported the newswire.
A Turnaround Firm Is Hired To Help Stabilize HealthSouth
HealthSouth Corp. turned over much of its top management to outsiders,
hiring turnaround firm Alvarez & Marsal Inc. to help stabilize the
company as it tries to arrange new financing and avoid a chapter 11
bankruptcy-court filing, the Wall Street Journal reported. At the same
time, the Birmingham, Ala.-based company said that in light of federal
allegations of accounting fraud, its previously filed financial
statements 'should no longer be relied upon,' the Journal reported. To
read the full article, point your browser to
href='http://www.wsj.com'>www.wsj.com (subscription required).
Owens Corning Plans To Sell Metal Systems Unit For $50
Million
Owens Corning is asking a bankruptcy court to approve procedures to
auction its Owens Corning Metal Systems division, including a $2 million
breakup fee for its stalking horse bidder, Dow Jones reported. The
company has a pending agreement to sell the unit, which makes
residential aluminum building products, to an entity called ALSCO
Acquisition Corp. for $50 million and assumption of some liabilities,
according to court papers, the newswire reported. The agreement to sell
the unit would allow paying the breakup fee and reimbursing up to
$500,000 in expenses related to the offer, the motion said. The U.S.
Bankruptcy Court in Wilmington, Del., has scheduled a hearing on the
auction procedures on April 28, reported Dow Jones.
KMART
Kmart Remains On Track For April Confirmation Hearing
Kmart Corp. remains on track for a bankruptcy court judge to consider
its reorganization plan at a hearing next month, according to comments
made by a company attorney on Monday, Dow Jones reported. Jack Butler
said in open court that the retailer, which filed for federal bankruptcy
protection in January last year, plans to file a roughly 100-page brief
related to the reorganization plan to the court by April 11. The
confirmation hearing has been scheduled for April 14. Separately, Kmart
Chief Restructuring Officer Ronald Hutchison said in an interview that
it was too early to tell whether the onset of the Iraq war had any
effect on the retailer's sales. He said Kmart would likely file its
annual report as well as operating reports for the months of January and
February to the Securities and Exchange Commission on Monday, reported
the newswire.
Kmart's Sales Fall 15 Percent, Loss Hits $3.22 Billion
Still hoping to emerge from chapter 11 proceedings next month, Kmart
Corp. reported a $3.22 billion loss for its fiscal year ended Jan. 29,
as sales continued to slide and it failed to win back enough of the
customers it lost following its bankruptcy-court filing, the Wall
Street Journal reported. The discount chain's loss, equivalent to
$6.36 a share, included a raft of charges related to its chapter 11
filing and reorganization. Excluding those items, the company would have
reported a loss of $846 million, Kmart said. In fiscal 2001, as its
business fell apart, Kmart posted a loss of $2.45 billion, or $4.95 a
share, reported the Journal.
Tobacco Stocks Down On $10 Billion Verdict Against Altria's Philip
Morris
The loss of a consumer fraud class-action suit by Altria Group Inc.'s
Philip Morris USA unit sparked a selloff of tobacco stocks on Monday,
Dow Jones reported. The suit, which was filed in state court in Madison
County, Ill., was unusual in that it claimed economic damages unrelated
to health claims, and it was the first class-action trial involving
light cigarettes to go to trial. The suit accused Philip Morris, the
maker of Marlboro Lights and Cambridge Lights cigarettes, of defrauding
Illinois consumers by marketing the brands as lower in tar and nicotine.
Illinois Circuit Court Judge Nicholas Byron ordered Philip Morris USA to
pay $7.1 billion in compensatory damages and an additional $3 billion in
punitive damages as well as $1.78 billion in plaintiff lawyer fees. Some
industry analysts said the case may encourage a new round of lawsuits
seeking to hold cigarette makers liable for deceiving smokers, rather
than for any personal injuries suffered as a result of smoking, reported
the newswire.
Judge Won't Recuse Himself From Armstrong World Case
U.S. Bankruptcy Judge Randall Newsome won't recuse himself from the
Armstrong World Industries Inc. bankruptcy case, an order filed with the
bankruptcy court in Wilmington, Del., said, Dow Jones reported. Liberty
Mutual Insurance Co. wanted the Judge off the case because he
represented the insurance company as an attorney in litigation against
Armstrong World in the 1980s over asbestos insurance coverage. Judge
Newsome denied Liberty Mutual's request, saying, 'In short, my
involvement in the Armstrong cases was marginal and my responsibilities
were few, in keeping with my unexalted status as a third-year
associate.' The judge described his involvement in the cases as
'peripheral,' the order obtained by Dow Jones Newswires on Friday
said.
GenTek Seeks Court Approval Of Joint Venture With Esseco
GenTek Inc. is seeking bankruptcy court approval of a joint venture
agreement with Esseco SpA through which GenTek eventually would sell its
interests in an underperforming business of an affiliate, Dow Jones
reported. Under the terms of the proposed deal, Esseco would purchase a
51 percent ownership interest in General Chemical Corp. for $400,000 in
cash and the assignment of its own customer contracts. Esseco would
purchase the remaining 49 percent interest from General Chemical in
roughly three years. Esseco's obligations under the buyout would be
partially secured by a letter of credit in GenTek's favor, according to
court documents, reported the newswire. GenTek filed for chapter 11
bankruptcy protection with 31 affiliates, including Noma Co. The
companies listed assets of $1.2 billion and liabilities of $1.4 billion
in the petition, reported the newswire.
Adelphia Finance Chief Alleges Its Probe of Director Fell Short
The chief financial officer of Adelphia Communications Corp. alleged in
a resignation letter last week that the scandal-torn cable company
failed to properly investigate and disclose transactions between the
company and one of its directors, according to a filing with the
Securities and Exchange Commission, the Wall Street Journal
reported. The allegations by Christopher Dunstan are unusual because
they involve one of the company's independent directors and the
management team that was brought in after the self-dealing and fraud
scandal erupted in the spring of 2001, reported the online newspaper.
Most of the management team, including members of the founding Rigas
family, resigned at that time, reported the Journal.
Bankruptcy Judge Won't Extend Bethlehem Steel Retiree Benefits
Company-paid health benefits for 30,000 white-collar Bethlehem Steel
retirees will end this month, after a bankruptcy judge on Monday
rejected a request to extend coverage through April, the Associated
Press reported. Instead of the extension, the court approved an
arrangement that might offer both union and salaried retirees
reimbursement for two weeks of medical insurance. But the possibility of
reimbursement would hinge on whether any money is left in the troubled
steelmaker's reserves once it emerges from bankruptcy , and would only
offset bills of retirees who purchase so-called COBRA insurance through
the company, reported the newswire. The arrangement was approved by U.S.
Bankruptcy Judge Burton R. Lifland.
UAL Judge Delays Ruling With Credit Card Processors
Bankruptcy Judge Eugene Wedoff said on Monday he would need more
time before ruling on a motion presented in the UAL Corp. bankruptcy
case by National Processing Co. LLC (NPC) and National City Bank of
Kentucky, Dow Jones reported. The companies process about half of the
Visa and Mastercard credit card payments to United Airlines, a unit of
UAL, for airline ticket purchases, worth nearly $6 billion a year, they
said. Earlier this month, NPC and National City filed a motion that
asked the court to either end or change their processing agreement with
United. The companies said they believe that United, in chapter 11
reorganization since Dec. 10, 2002, has only a 'slight' ability to
reorganize successfully. They worry that, should UAL be forced to
liquidate, their current contract with the airline would make it
difficult for them to recover the money they were owed. United Airlines
last week filed an objection to the motion, maintaining that risks for
card processors are covered by their existing contract, which was signed
in 2000, reported the newswire.
Pension Deal Could Aid US Air's Emergence From Bankruptcy
Federal pension regulators expect to decide this week whether to accept
a deal struck between US Airways Group Inc. and its pilots on a new
pension plan, the last major obstacle to the airline's emergence from
bankruptcy, the Associated Press reported. The airline and the pilots'
union agreed over the weekend on a new, defined-contribution plan that
will replace the old defined-benefits plan, which will be taken over by
the federal Pension Benefits Guaranty Corp. (PBGC). A hearing is
scheduled for Friday in U.S. Bankruptcy Court. If the PBGC gives its
blessing to the plan by then, it is likely that the bankruptcy judge
would give final approval to US Airways' reorganization plan, reported
the newswire.
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