|
Labor Circulates Letter Opposing Hatch's Asbestos Bill
Hope for bipartisan support of a proposed asbestos compensation bill
took a heavy hit yesterday as the AFL-CIO circulated to senators a
strongly worded letter of opposition to the measure,
CongressDaily reported. The legislation, sponsored by Senate
Judiciary Chairman Orrin Hatch (R-Utah), calls for the establishment of
a $108 billion trust fund to pay for claims submitted to a special new
court by persons suffering from certain asbestos diseases. In its strong
plea to senators not to sign on to the Hatch bill, the AFL-CIO leveled
an attack against the legislation, charging that it 'fails to provide
fair, timely and certain compensation to victims-while relieving
manufacturers, employers and insurers of all liability.'
Bill Samuel, labor's legislative director, in the letter said the
Hatch bill also set such restrictive eligibility standards that
thousands of stricken victims could not quality for compensation.
Moreover, Samuel maintained the bill's trust fund would not provide
sufficient money to cover anticipated claims, reported the newswire.
Hatch called labor's letter 'all tactics' aimed at softening support for
his bill. But he left the door open for further talks with labor and
other affected parties to hash out a compromise acceptable to each side,
CongressDaily reported.
On Class Action, House Borrows From Senate
House Judiciary Chairman James Sensenbrenner (R-Wis.) will introduce a
compromise amendment to the House class action bill that supporters hope
will awaken Democratic support when the legislation goes to the floor
for a vote today, CongressDaily reported. Sensenbrenner's
amendment borrows language from a compromise amendment by Sen. Dianne
Feinstein (D-Calif.) to the Senate class action bill that was approved
during an April markup.
The bill has been the subject of intense lobbying by both the
business and the public interest communities. Meanwhile, vote-counting
has begun on the Senate bill by Judiciary Chairman Orrin Hatch (R-Utah).
Supporters are seeking 60 votes to head off a likely filibuster by
Democrats. According to sources, the bill will come up for a vote after
the July Fourth recess, but before the August recess, reported the
newswire.
Fed Detects Scattered Signs of Economic Rebound
The weak U.S. economy, which has suffered thousands of job losses in
recent months, may be on the verge of a rebound now that the Iraq war is
over, the Federal Reserve said on Wednesday, the Associated Press
reported. The central bank said that four of its 12 districts -- Dallas,
Kansas City, New York and Minneapolis -- detected signs of increased
economic activity and no district reported further deterioration since
the last report in late April. 'The unwinding of war-related concerns
appears to have provided some lift to business and consumer confidence,
but most reports suggest that the effect has not been dramatic,' the
central bank said in its latest survey of business conditions, reported
the newswire. However, the central bank cautioned against reading too
much into the scattered signs of a rebound, describing overall activity
in many districts as still 'sluggish,' AP reported.
The survey of business conditions will be used by Fed policy-makers when
they meet June 24-25 to set interest rates. Many analysts are convinced
that the Fed will cut rates for a 13th time at that meeting in an effort
to make sure that the current weak patch the country is going through
does not deepen into something worse, such as another recession,
reported the newswire.
Farmland Industries to Sell Stake in Beef Unit for $232
Million
Farmland Industries Inc., which is seeking to reorganize under
bankruptcy protection, said it will sell its 71 percent stake in
Farmland National Beef Packing Company to U.S. Premium Beef Ltd. for
$232 million, Bloomberg News reported. U.S. Premium Beef owns 29 percent
of Farmland National Beef, Farmland Industries said in an e-mailed
statement. It said the sale is subject to bankruptcy court approval and
is expected to be completed this summer. Farmland National Beef is the
fourth largest beef packer in the United States, processing 3.2 million
head of cattle annually, the statement said. Kansas City, Mo.-based U.S.
Premium Beef is a beef marketing company, reported the newswire.
Fastnet Seeks Bankruptcy Protection
Fastnet Corp., a provider of Internet service to businesses in the
northeastern United States, filed for bankruptcy protection after losing
money every quarter since first selling shares to the public in February
2000, Bloomberg News reported. Fastnet listed $23 million in assets and
$29 million in debts in chapter 11 papers filed on Tuesday in the U.S.
Bankruptcy Court in Reading, Pa. The company, whose customers are small-
and medium-sized businesses mainly in New Jersey and Pennsylvania, said
it will continue to operate in bankruptcy.
Fastnet joins a host of other Internet service providers that have
filed for bankruptcy since the sector's decline started in 2000,
including At Home Corp., NorthPoint Communications Inc. and Rhythms
Netconnections Inc. Bethlehem, Pa.-based Fastnet's shares have lost
almost all of their value since an initial public offering in February
2000, when they reached an all-time high of $13.63.
Mirant Bondholders Sue to Block Debt Offer
A group of bondholders filed suit against Mirant Corp., accusing the
struggling energy firm of 'depleting and raiding the assets' of a
subsidiary and seeking to block Mirant from restructuring $1.45 billion
of debt, Reuters reported. The suit, brought by the California Public
Employees' Retirement System and others, was filed late on Tuesday in
Delaware Chancery Court. The investors who brought the suit hold about
$300 million of $2.5 billion in bonds at face value issued by Mirant
Americas Generation Inc. (MAGI), according to a copy of the suit.
Atlanta, Ga.-based Mirant, seeking to lighten an onerous $5.3 billion
debt load and ward off bankruptcy, offered on June 2 to exchange up to
$1.45 billion in unsecured bonds due within three years for new secured
notes due in 2008. The new notes would be secured by first-priority
liens on certain assets owned by Mirant's U.S. subsidiaries.
But Mirant Americas bondholders objected to the plan, contending that it
would subordinate them to bondholders in Mirant Corp., the parent
company. 'The exchange offers are an illegal 'asset grab' by Mirant in
violation of federal securities laws,' the suit contended. It said 'the
subordination of MAGI creditors will shift the risk of Mirant's default
on its obligation from Mirant creditors to MAGI creditors,' reported the
newswire.
Enron Will Refund California $634,000 From 10 Wind Facilities
Enron Corp., charged with manipulating Western U.S. power markets before
its collapse in 2001, will refund California $634,000 it received from
the state to boost production at 10 wind-energy plants, Bloomberg News
reported. The facilities misrepresented their eligibility for funds
meant to encourage the development of renewable energy, said California
Governor Gray Davis in a statement. A federal bankruptcy judge in New
York approved the settlement.
The state is seeking $9 billion in refunds from energy companies it
claims manipulated power prices during California's 2000-2001 energy
crisis. Enron filed for bankruptcy in 2001 and is being investigated by
federal regulators over wind-power plants in
California following complaints that it charged excessive rates by
hiding its ownership in those facilities. 'We appreciate any refund that
we receive for the manipulation of the California energy market, but
this amount of money barely scratches the surface of what Californians
are owed,'' Davis said in the statement, reported the newswire.
Pennsylvania Attorney General Recovers $1.2 Million for Consumer
Victims
Pennsylvania Attorney General Mike Fisher yesterday announced in a press
release distributed by PR Newswire the approval of a $1.2 million U.S.
Bankruptcy Court settlement involving 'Video Computer Store' of Bucks
County and its owner, who were accused of selling computer systems to
6,800 consumers nationwide without delivering some or all of the
products ordered. The settlement represents one of the largest consumer
restitution awards recovered in the U.S. Bankruptcy Court by Fisher's
Bureau of Consumer Protection.
'My office followed the defendants into U.S. Bankruptcy Court and fought
to recover monies that rightfully belonged to victims,' Fisher said.
'This is a significant victory for thousands of consumers who had little
chance of recovering their losses. It also serves notice to companies
who choose bankruptcy as a way to avoid litigation that my office will
hold them accountable for harming consumers.' Fisher said the
settlement, approved by Judge Diane Weiss Sigmund of the U.S. Bankruptcy
Court for the Eastern District of Pennsylvania, ends several lawsuits
filed by his Bureau of Consumer Protection. Additional information on
the settlement is available at
href='http://www.attorneygeneral.gov/'>www.attorneygeneral.gov.
Universal Health Services to Purchase Three Vista Hospitals
Universal Health Services Inc. announced yesterday in a press release
distributed by PR Newswire that it has signed an agreement to purchase
the assets of three acute care hospitals from Vista Health System. The
purchase of these hospitals will be subject to both bankruptcy and
customary regulatory approvals. The transaction is expected to be closed
within the next nine to 12 months. Universal Health Services is one of
the nation's largest hospital companies, operating acute care and
behavioral health hospitals, ambulatory surgery and radiation centers
nationwide, in Puerto Rico and in France.
WORLDCOM
WorldCom Directors' Credibility Doubted
Former WorldCom directors should get the boot from other boards because
their credibility has been so damaged amid the telecom giant's collapse,
say corporate governance experts, USA Today reported. At least
five former directors sit on the boards of 15 companies and non-profits
-- including such blue-chip outfits as pharmaceutical powerhouse Wyeth,
mutual fund manager Dreyfus and Johns Hopkins University.
The directors were blasted Monday in two reports detailing events that
drove WorldCom into the United States's biggest bankruptcy filing. 'It
severely impairs the personal credibility of the individuals involved,'
says Nell Minow of The Corporate Library, a research firm, reported the
newspaper.
SEC, WorldCom Say Settlement Is Just
Lawyers for the Securities and Exchange Commission (SEC) yesterday
defended the agency's proposed $500 million fraud settlement with
WorldCom Inc., saying it punished the company severely without
jeopardizing its ability to emerge from bankruptcy later this year, the
Washington Post reported. The telecommunications giant's lawyers
also defended the proposed deal during a hearing in federal court,
saying it recognized the company's cooperation with the government and
commitment to corporate reform, including the removal of more than two
dozen executives who have been linked to its accounting scandal,
reported the Post.
U.S. District Judge Jed S. Rakoff, who is presiding over the SEC's fraud
case against WorldCom, said he had not yet made up his mind whether to
accept the settlement. However, during the hearing, Rakoff asked several
questions about the proposal, many of which he said were raised in
formal submissions -- almost all of which opposed the agreement, the
newspaper reported. According to Reuters, Rakoff said he was intrigued
by a proposal made by some former WorldCom shareholders that they be
compensated for their huge losses by receiving shares of the new company
when WorldCom emerges from bankruptcy. He ordered lawyers for SEC and
WorldCom to examine the idea.
WorldCom competitors AT&T Corp. and Verizon Communications Inc. have
argued that the penalty is far too lenient given the size of WorldCom's
fraud.
PG&E Bankruptcy Judge Delays Hearing Until June 20
The federal judge presiding over the Pacific Gas & Electric Co.
(PG&E) bankruptcy has postponed until June 20 a status conference in
the case, Reuters reported. A conference for the PG&E Corp.-owned
utility and the California Public Utilities Commission (CPUC) was
scheduled for Monday, but U.S. Judge Dennis Montali delayed it in a
brief order issued last Thursday. Montali, who has twice stayed
proceedings so another federal judge could hold closed-door settlement
talks with PG&E and the CPUC, did not give a reason for the delay.
The CPUC and PG&E each said they could not discuss the case because
the bankruptcy court has issued a gag order on the settlement
conference. Pacific Gas & Electric filed for chapter 11 bankruptcy
protection in April 2001 after piling up huge debts buying power at the
height of the state's energy crisis in 2000-01, reported the
newswire.
Delta Air Pilots May Approve Early Contract Talks on Cuts
The Delta Air Lines' pilots union is expected to approve opening early
contract talks on possible wage concessions that the carrier says it
needs to remain competitive with its rivals, the Wall Street
Journal reported. But some union officials are pushing for the
company to give plenty in return, which could complicate the talks.
Leaders of the Air Line Pilots Association, which represents about 9,000
Delta pilots, are meeting in Atlanta this week and could vote as soon as
Thursday to proceed with negotiations, according to people close to the
discussions. The union leaders are working out details of a possible
counterproposal to Delta's request for concessions. Delta is asking,
among other things, for a 26.5 percent cut in pilots' hourly wages and
cancellation of a 4.5 percent raise next year, reported the online
newspaper.
Union Sees Opening in United's Turmoil
The Aircraft Mechanics Fraternal Association (AMFA), the upstart labor
group that has been an irritant to bigger, more powerful unions over the
last decade, is now after its biggest prize yet: the 14,000 mechanics at
United Airlines, the New York Times reported. An election that
starts today promises to add a further layer of turmoil at United, which
filed for chapter 11 bankruptcy in December. A successful drive at
United would more than double the size of AMFA, which has about 11,000
members at seven airlines, and is not affiliated with the
A.F.L.-C.I.O.
AMFA is facing off against the International Association of Machinists
and Aerospace Workers, the powerful union representing more than 100,000
airline mechanics across the country. United is the first bankrupt
carrier where a rival union has begun an organizing drive, reported the
Times.
House Panel Seeks HealthSouth Data
The House committee investigating accounting fraud at HealthSouth Corp.
yesterday asked the company's former chief executive to produce a slew
of information and documents, and said that it will subpoena more
information today, the Washington Post reported. House Energy and
Commerce Committee leaders wrote Richard M. Scrushy, the health care
company's former head, requesting that he turn over documents provided
to other government investigators and records of communication with
HealthSouth executives and employees. The letter also asked for
information about offices that HealthSouth maintained outside its
Birmingham headquarters, and details of some of Scrushy's financial
transactions, reported the Post.
Air Canada Says Stock Will Likely Be Worthless
Air Canada's board of directors approved a plan to seek debt and equity
financing to emerge from bankruptcy protection that will likely wipe out
the value of its stock, the airline said on Wednesday, Reuters reported.
'In such circumstances, it is highly likely that a substantial portion
of the company's unsecured debt will be converted to new equity and that
there will not be any meaningful recovery to existing equity of the
company,' Air Canada said in a statement. The Montreal-based airline
hopes to emerge from bankruptcy protection as a leaner and profitable
airline. It is seeking to renegotiate some C$4.3 billion ($3.2 billion)
of debt and C$8 billion of aircraft lease commitments, reported the
newswire.
FiberCore Defaults on Tyco-backed Loan
FiberCore Inc., a fiber-optic company scrambling to avoid bankruptcy, on
Wednesday said it defaulted on a $8.5 million loan guaranteed by an
affiliate of Tyco International Ltd., Reuters reported. The default may
put Tyco, the Bermuda-based conglomerate that owned 15 percent of
FiberCore shares at the end of 2002, in a position to take over the
Charlton, Mass.-based company. FiberCore said Fleet National Bank on
June 3 issued a default notice and accelerated the loan, demanding
payment in full, plus interest, by June 10, reported the newswire.
FiberCore has estimated it needs $5 million in new financing to stave
off a possible bankruptcy reorganization or insolvency. It said if Fleet
forces Tyco to pay off the loan, then Tyco would have the right to
control the company's board of directors, Reuters reported.
Thanks for visiting
Today's Bankruptcy Headlines. New articles are posted here each business
day.
|
