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Family Farmer Bankruptcy Relief Act of 2003 Cleared for White
House
The Family Farmer Bankruptcy Relief Act of 2003 (H.R. 2465, S. 1323),
which expired on July 1, was passed by the Senate on July 31 and cleared
for the White House the same day. The bill will extend for six months
special bankruptcy protections that allow family farmers to hold onto
their assets while reorganizing debt. President Bush signed a six-month
extension (P.L. 107-377) on Dec. 19, 2002. This was the fifth temporary
extension of a law that was first enacted in 1986. About 800 to 1,100
farmers file for chapter 12 bankruptcy protection each year. A provision
in H.R. 975, passed by the House in March, would expand the law's
coverage and make it permanent.
UAL's Loss Widens to $623 Million on Reorganization Costs
United Airlines parent UAL Corp. said its second-quarter loss almost
doubled to $623 million because of the cost of the company's
reorganization, Bloomberg News reported. The net loss widened to $6.26 a
share from $341 million, or $6.08, in the same period last year, the
Chicago-based company said in a statement. Sales fell 18 percent to
$3.11 billion from $3.79 billion. Reorganization costs totaled $397
million. UAL has been unable to cut costs enough to match a drop in
ticket sales and fares that have stayed low as the Iraq war and a deadly
illness in Asia reduced demand. The revenue slump began in 2001 because
of less business travel and the Sept. 11 attacks, reported the
newsire.
Northwest Says It Can't Buy Back Workers' Shares
Northwest Airlines said Friday it won't immediately buy back $226
million in stock issued to employees in return for wage concessions that
kept the airline out of bankruptcy in 1993, the Associated Press
reported. The airline said it's not legally able to buy the stock back
right now. The airline's unions had filed a lawsuit to force the company
to abide by the agreement. 'We recognize the valuable contributions our
employees made to the company during the 1993-1996 wage reduction period
and acknowledge the company's obligation to buy back the Series C
Preferred Stock. We want to do so as soon as possible,' Northwest said.
But the statement said 'legal restrictions' under Delaware law prevented
the company from buying back the shares, reported the newswire.
Wheeling-Pittsburgh Exits From Chapter 11 Protection
Wheeling-Pittsburgh Steel Corp. said it has emerged from chapter 11
bankruptcy protection, more than two and half years after seeking
protection from its creditors, the Associated Press reported. The news
on Friday came two days after union steelworkers approved a five-year
contract that contained wage concessions and was a key part of the
restructuring. Calling the contract's approval the 'final, necessary
piece of the puzzle,' Wheeling-Pitt President and Chief Executive James
Bradley said the company can now claim a $250 million federally
guaranteed loan package. 'With the labor agreement and new financing in
place, the company is now ready to move forward,' Bradley said.
Wheeling-Pitt, which filed for bankruptcy in November 2000, had planned
to emerge from bankruptcy protection by Aug. 15 and claim the loan from
the Royal Bank of Canada, reported the newswire.
Cingular in Talks to Buy NextWave Licenses
Cingular Wireless is in talks to buy some of NextWave Telecom Inc.'s
wireless licenses, but has not reached a final agreement, the company
said on Friday, Reuters reported. A news release that said Cingular had
agreed to buy NextWave's licenses in 34 markets for $1.4 billion in cash
was erroneously released by NextWave's public relations firm Hill &
Knowlton due to a clerical error, according to the agency. NextWave,
which has been in bankruptcy protection since 1998, and Cingular, a
joint venture between BellSouth Corp. and SBC Communications Inc., have
been in talks for a deal for at least two months. 'A definitive
agreement has not been reached and there can be no assurance that an
agreement will be reached or, if reached, that any transaction will be
consummated,' Cingular said in a statement, reported the newswire.
Travelers Wins Asbestos Ruling, Shares Jump
Insurer Travelers Property Casualty Corp. said on Friday it won a
favorable ruling from a legal arbitration panel on asbestos claims by
bankrupt ACandS Inc., which could save it more than $1 billion dollars
in payouts, Reuters reported. Its shares jumped close to 6 percent in a
broadly lower market. According to Travelers, the panel issued a
confidential ruling late on Thursday saying asbestos-related injury
claims made by ACandS in the future would be subject to Travelers'
overall insurance policy limits, which have already been exhausted.
That would mean no further payouts for ACandS, the former insulation
installing unit of Armstrong World Industries Inc., which filed for
bankruptcy last year due to 270,000 asbestos claims. The company is now
looking to emerge from bankruptcy with the help of insurers, chiefly
Travelers, which it hopes will pay a large share of those claims,
reported the newswire.
Bankrupt Power Generators Won't Cause Blackouts
Despite legal wrangling over power supply contracts between bankrupt
generators and their utility customers, homeowners need not worry about
blackouts, but might face higher electricity bills, industry officials
say, Reuters reported. Several bankrupt merchant energy companies are
struggling to exit money-losing contracts to deliver power to utilities,
but federal and state officials have so far blocked those efforts.
Even if a generator is successful in breaking a supply contract, energy
experts say utilities will still be able to buy electricity for their
customers, but at higher prices. 'The contract dispute will not result
in blackouts,' said Beryl Lyons of the Connecticut Department of Public
Utility Control, referring to the ongoing legal battle between NRG
Energy Inc. and Connecticut Light and Power, reported the newswire.
Williams Ends Allegheny Power Contract for $128 Million
Williams Cos. Inc. on Friday said it has agreed to end a power contract
with Allegheny Energy Inc., reaping $128 million and enabling Allegheny
to further disentangle itself from the energy trading business, Reuters
reported. Both Williams, a natural gas producer and pipeline operator,
and Allegheny, a power company, have struggled to survive in the wake of
a collapse in the power sector prompted by the bankruptcy of energy
trader Enron Corp. The contract being terminated is for Tulsa,
Okla.-based Williams to supply up to 1,000 megawatts of power to
Allegheny. It had been scheduled to expire in 2018.
Allegheny has been struggling to avert a bankruptcy filing despite
securing $2.4 billion in financing earlier this year. Just last week it
received regulatory approval to complete a $300 million financing and
borrow as much as $2.2 billion under its existing credit facilities,
reported the newswire.
MCI Finds No Improper Routing; AT&T Practices Are
Questioned
MCI's internal review hasn't found any evidence that it had improperly
routed telephone calls, the Wall Street Journal reported. At the
same time, two of the companies doing business with one of MCI's rivals,
AT&T Corp., said AT&T had engaged in routing practices
comparable to those of MCI. The U.S. attorney's office for the Southern
District of New York is investigating claims by AT&T and other
competitors that MCI conspired to route phone traffic in order to avoid
paying access charges to other phone-network operators. The charges have
come at a critical time for MCI, which is fighting to emerge from
chapter 11 bankruptcy-court protection and said it will clean up its
operations following its admission to the largest accounting fraud in
history, reported the Journal.
American Air Parent to Sell $250 Million Convertible Bonds
AMR Corp. today said it plans to privately sell $250 million of 20-year
bonds convertible into company stock, and use net proceeds for working
capital and general corporate purposes, Reuters reported. Fort Worth,
Texas-based AMR, which narrowly avoided bankruptcy earlier this year,
becomes the latest of several airline companies to sell convertibles as
capital markets improved and investors grew more comfortable with some
carriers' survival prospects. AMR said the bonds will be guaranteed by
American, the world's largest airline. It said it may sell an additional
$50 million of bonds to meet demand.
Conseco Bankruptcy Exit Now Hinges on Releases
Conseco Inc.'s bankruptcy exit was further delayed on Friday after a
federal judge said she saw several problems with releases the plan would
give former executives who took loans from the insurer, Reuters
reported. Conseco hoped to exit chapter 11 in July, but now hopes to
emerge by the end of August if it can reach agreements with some
creditors, the U.S. Trustee and the U.S. Securities and Exchange
Commission over the releases. Judge Carol Doyle of the U.S. Bankruptcy
Court in Chicago did not rule on their validity, but told Conseco
lawyers that parts were 'a little more obtuse than your average
release.'
Doyle's remarks were intended to give lawyers for Conseco and the
objectors guidance to resolve the dispute. Former chief executive and
current chairman Gary Wendt also objects to the releases from which he
has been excluded specifically. 'We are hopeful (of reaching agreement
on the releases),' said Anup Sathy, a Kirkland & Ellis lawyer
representing Conseco. 'We got very good guidance from the judge today,'
reported the newswire.
U.S. Bankruptcy Court Approves Ross's Burlington Deal
A U.S. Bankruptcy Court on Friday approved the sale of textile firm
Burlington Industries to New York buyout firm W.L. Ross & Co, the
company said, Reuters reported. W.L. Ross said it is paying $614 million
for the company, which has operations in the United States, Mexico and
India. The court approval caps an auction process that began in February
when Ross, a major bond holder in Burlington, won a court order
requiring an open auction for the Greensboro, N.C.-based textile maker.
The decision dissolved an earlier agreement for Burlington to be sold to
investor Warren Buffet's Berkshire Hathaway for about $579 million.
Safety-Kleen Sees Q3 Bankruptcy Exit
Safety-Kleen Corp. on Friday said it expects by the end of September to
exit bankruptcy after more than three years, after a Delaware judge
confirmed its reorganization plan, Reuters reported. The order, dated on
Friday by Judge Peter Walsh, removes one of the last hurdles for
Plano, Texas-based Safety-Kleen to emerge from chapter 11. The company
filed for protection from creditors on June 9, 2000. Safety-Kleen sought
chapter 11 after it skipped some interest payments, its auditor withdrew
three years of financial statements, and U.S. securities regulators
began investigating it for accounting irregularities. The U.S.
Securities and Exchange Commission said last December it settled
accounting fraud charges against the company and four former top
officers, reported the newswire.
'Iron Mike' Tyson Files for Bankruptcy
Troubled boxing champ Mike Tyson, once estimated to be worth at least
$300 million, has filed for bankruptcy in an attempt to bring some order
to his finances, his lawyer said on Sunday, Reuters reported. Tyson
filed for chapter 11 bankruptcy protection in U.S. Bankruptcy Court in
Manhattan on Friday, according to his attorney, Debra Grassgreen.
The one-time heavyweight boxing champion opted for bankruptcy after
years of financial mismanagement and free spending habits that burned
through hundreds of millions of dollars in earnings. According to media
reports, Tyson amassed and spent between $300 million and $500 million.
'As a professional fighter, who relied on others to manage his affairs,
he discovered that his debts far exceeded his assets,' Sunday's New
York Post quoted Grassgreen as saying. 'Now, he has taken the lead
in bringing order to his financial affairs,' she said, reported the
newswire.
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