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June 14, 2005
Cost Estimate Sought for Asbestos Litigation Bill
Rep. Ernest Istook (R–Okla.) yesterday asked the Congressional
Budget Office (CBO) to prepare a cost estimate of the Senate Judiciary
Committee’s asbestos litigation bill “as soon as
possible” so House members can evaluate it, even though the bill
has not yet passed the Senate, CongressDaily reported.
While Istook said in a letter to CBO Director Douglas Holtz-Eakin that
he has “not established a position” on the legislation, he
said he has “been informed that [the bill’s] resolution fund
would add billions of dollars to the public debt that would take decades
to pay off, interest costs would consume much of the value of the fund,
be unable to pay all valid claims, create a gigantic, wasteful
bureaucracy, and sunset early.” Senate Judiciary Committee members
in late May approved the bill on a bipartisan 13–5 vote, with
Judiciary Chairman Arlen Specter (R–Pa.) saying more changes would
be negotiated before the bill is brought up for Senate debate.
Chain Stores Sales Rise in Latest Week
U.S. chain store retail sales rose in the latest week, helped by
warmer weather in the eastern United States, a retail report said on
Tuesday, Reuters reported. Sales rose 0.6 percent in the week ended June
11, compared with a 0.4 percent rise the previous week, the
International Council of Shopping Centers and UBS said in a joint
report. Compared with the same week a year ago, sales momentum also
improved, rising 3.7 percent compared with a 3.3 percent rise the
preceding week. The ICSC-UBS Weekly Chain Store Sales Snapshot is
compiled from a group of major discount, department and chain stores
across the country that report their weekly results.
U.S. Judge Orders ABB settlement Filing by June 24
A U.S. bankruptcy judge on Monday ordered the parties in the asbestos
case of Swiss-based engineering group ABB Ltd. to file their revised
settlement papers no later than June 24, one of the lawyers who
successfully appealed the original deal said, Reuters reported. Judge
Judith Fitzgerald of the U.S. Bankruptcy Court for the Western
District of Pennsylvania in Pittsburgh also set a July 7 hearing on the
terms of the settlement, the newswire reported. Steven Kazan, who
represents claimants with cancer, said the lawyers from all sides were
meeting this Wednesday to proof-read the documents and said he hoped
papers could be filed as soon as the end of this week. ABB said last
Friday it expected to present its plan to the bankruptcy court anytime
after June 13.
Proxim Files for Bankruptcy, to Sell Company for $21 Million
San Jose–based Proxim has filed for chapter 11 bankruptcy and
agreed to sell itself for $21 million, the Associated Press reported.
According to its filing on Saturday in the U.S. Bankruptcy Court in
Wilmington, Del., Proxim has assets of a little more than $55 million
and debts of nearly $102 million. Proxim listed Symbol Technologies,
with a claim of nearly $18 million, as its biggest creditor. The claim
is from a patent infringement judgment against Proxim. Proxim is a maker
of wireless Internet hardware.
United
Banks Aren’t Eager to Let United off the Hook on
Reorganization Deadline
Banks owed money by United Airlines have broken ranks with other
creditors and opposed the carrier’s request that its management
team get more time to work on a reorganization plan without competition
from other interests, the Chicago Tribune reported. U.S.
Bank National Association and the Bank of New York are objecting to
United’s request for permission to extend until Sept. 1 its
exclusivity period, the newspaper reported. Bankruptcy Judge Eugene
Wedoff is expected to consider United’s request at a hearing
Friday. The current exclusivity period expires on July 1.
United May Have Possible Suitors, Committee Says
The unsecured creditors’ committee for UAL Corp’s
bankrupt United Airlines have indicated that outside parties may be
interested in making a bid for the No. 2 U.S. carrier, a court document
showed, Reuters reported. The committee filed the motion on June 9
supporting United’s request for an extension of its exclusivity
period, during which only the airline may file a reorganization plan.
The creditors’ committee, however, injected a sentence in the
motion implying that others are considering filing their own
reorganization plans. United, which has been in chapter 11 since
December 2002, has asked the bankruptcy court for a 60-day extension of
its exclusivity. The current period expires July 1.
New Bankruptcy Act Impacts Derivatives Industry
Thirty bankers and derivatives counsel came to hear Ellen H. Clark, a
New York–based derivatives lawyer with Salans international law
firm, speak on Tuesday, June 7, about the recently adopted Bankruptcy
Act of 2005 signed into law by President Bush on April 20, 2005,
eMediaWire reported. Although the Act was meant in large part to curb
abuses by profligate debtors, buried in its 185 pages is a long-awaited,
change-making section called Title IX on “financial
contracts” which has turned the heads of derivatives specialists.
The recent changes to the law provide creditor protection from court
stays and avoidance measures as to a broader class of derivatives trades
and market participants in the financial contracts arena, the newswire
reported.
href='http://www.emediawire.com/releases/2005/6/emw250163.htm'>Read the
full article.
Northwest’s Fare Hike Fails
Eagan, Minn.–based Northwest Airlines Inc.’s attempt to
pierce the ceiling on business fares over the weekend failed after other
carriers declined to match the moves, the Dallas Morning
News reported. The nation’s No. 4 carrier had added $50 to
several fares used by business travelers for tickets purchased shortly
before travel. That would have broken a sort of cap set on those rates
when Delta Air Lines Inc. introduced “Simplifares” in
January, limiting one-way fares to $499. Northwest also had raised
one-way fares in most markets between $5 and $10 depending on how long
the flight was, the standard increase that’s succeeded eight times
href='http://www.hoovers.com/free/news/detail.xhtml?ArticleID=NR200506141180.3.46_a8f6001362e1449f'>Read
the full article.
Winn-Dixie Revising Retention, Severance Plan
Two weeks after proposing to pay $14 million in retention bonuses to
key employees and up to $120 million in severance payments for all
employees, Winn-Dixie Stores Inc. is revising those plans after some
creditors objected, the Florida Times-Union reported.
According to documents filed in the U.S. Bankruptcy Court in
Jacksonville, Fla., Winn-Dixie has negotiated changes in the employee
retention and severance plans with its committee of unsecured creditors.
The revised plans have not yet been filed but are scheduled to be
brought before U.S. Bankruptcy Judge Jerry Funk at a hearing on
Thursday. Winn-Dixie, which filed petitions to reorganize under chapter
11 of the U.S. Bankruptcy Code in February, proposed a plan on May 27 to
pay bonuses to 290 key executives that would equal 25 percent to 150
percent of their annual salaries if they remained with the company
through the bankruptcy proceedings. The Jacksonville-based supermarket
chain also proposed a severance plan covering all of its 79,000
employees if they lose their jobs in the reorganization. The severance
payments range from as much as three times the base salary plus a bonus
for the chief executive officer to as little as $100 for part-time
employees with less than one year of service. Several objections to the
company’s plans were filed late last week with the court. U.S.
Trustee Felicia Turner said in her objection that Winn-Dixie’s
plans “are excessive and discriminate in favor of top level
management employees,” the newspaper reported.
Brobeck Ex-Partners Fight Bankruptcy Suits
Ten former partners at Brobeck, Phleger & Harrison have asked the
San Francisco bankruptcy court to throw out suits filed against them by
the firm’s bankruptcy trustee, Law.com reported. In January,
trustee Ronald Greenspan sued all former Brobeck partners for
distributions they received in 2001 and 2002, during which time he
alleges the firm was insolvent. The 10 partners challenging him were
sued for $130,000 to $1.2 million. The partners claim that the trustee
has misinterpreted California law governing limited liability
partnerships to say they are not entitled to any compensation for their
work. “Under the trustee’s interpretation of the statutes,
law partners who stay with the partnership and continue working to
generate receivables while the firm experiences financial difficulty
face the greatest liability,” Cecily Dumas, who is representing
eight junior partners, wrote in a June 1 filing.
href='http://www.law.com/jsp/article.jsp?id=1118666114838'>Read the full
article.
Good Reputation Forges Recovery after Bankruptcy: Michigan Company
Is Back on a Roll, Thanks to Customer Service History
Many small companies emerging from bankruptcy take on a new identity
to get a fresh start, but two years ago the managers at Alkar Steel and
Processing Corp. in Roseville, Mich., decided that their company’s
name was worth preserving, the Detroit News reported. They
counted on their reputation for on-time deliveries and good service to
outweigh the problems before and during a seven-month bankruptcy.
Despite continued turbulence in the steel and auto industries, Alkar has
returned to profitability by winning back almost all the customers it
had lost.
href='http://www.detnews.com/2005/business/0506/13/B02-212380.htm'>Read
the full article.