January 9, 2006
Bush Wants Congress to Pass Asbestos Bill
U.S. President George Bush called on Friday for Congress to curb asbestos lawsuits this year, saying the United States needed to reform its legal system to better compete in the global economy, Reuters reported Friday. "Hopefully this year, we can get a good asbestos reform out of the U.S. Congress," Bush said in a speech on the economy in Chicago. U.S. Senate Majority Leader Bill Frist (R-Tenn.) has pledged to bring up legislation early this year that would create a $140 billion fund to compensate victims harmed by exposure to asbestos, while ending hundreds of thousands of asbestos injury lawsuits.
The $140 billion asbestos compensation fund, proposed by Sen. Arlen Specter (R-Pa.) and Sen. Patrick Leahy (D-Vt.), would be paid for by asbestos defendant companies and their insurers. Read more.
Economy Gained Muscle Last Year, Expanding Jobs
The U.S. job market strengthened last year, as employers added 2 million jobs and the unemployment rate fell to 4.9 percent in December, the Washington Post reported Saturday. The data reinforced other signs that the economy was growing at a healthy pace as it entered the new year, despite the turmoil caused by hurricanes and higher energy prices. The figures offered a well-timed boost to President Bush, who touted them here in his latest outing in a campaign to convince Americans that his tax and budget policies are working, despite polling that shows widespread unease about the economy. Congressional Democrats said the unease is justified, noting that job growth in December was slower than many economists expected and citing Labor Department data showing that, for the average worker, prices are rising faster than wages. Read more.
Oregon Objects to Couple's Plan
Convicted politicians Dan and Victoria Doyle are asking a bankruptcy judge to free them from a mountain of personal debts, the Oregon Statesman-Journal reported Saturday. But the state is trying to block approval of the Salem, Ore., couple's bankruptcy plan, in hopes of collecting $130,264 in civil penalties. The Doyles' bankruptcy plan comes up for approval Jan. 24 in Eugene, Ore. Former Republican state lawmaker Dan Doyle is serving a 10-month jail sentence for falsifying campaign-finance reports for his 2002 and 2004 House races. He siphoned off $146,000 in campaign donations for personal use, then covered it up with dozens of false entries in 11 campaign-finance reports. Victoria Doyle already served a 10-day work-release sentence for falsifying one report for her 2004 Marion County clerk race. The couple claimed that they can't pay most of their $290,223 in debts, including college loans, defense-lawyer bills, country-club dues and credit-card debt. They filed for chapter 13 bankruptcy protection Oct. 12, five days before BAPCPA took effect. Read more.
U.S. Government on the Brink of Bankruptcy?
The U.S. government is about to reach the $8.18 trillion borrowing limit it set for itself by law. If Congress does not enact a new borrowing limit soon, the government could default on its financial obligations as early as March, a press release at PRNewswire said on Saturday. But a new borrowing limit just means the government will go deeper in debt. The Treasury Department has already warned Congress of the danger. In a Dec. 28, 2005, letter, Treasury Secretary John Snow stated, "the statutory debt limit, currently $8.184 trillion, will be reached in mid-February 2006... [U]nless the debt limit is raised or the Treasury Department takes authorized extraordinary actions, we will be unable to continue to finance government operations." Read more.
Autos Boost Retail Spending in December: U.S. Economy Preview
Americans flocked to retailers and auto showrooms in December to take advantage of discounts and promotions, pointing to a rebound in consumer spending that will reenergize the U.S. economy early this year, Bloomberg News reported yesterday. Retail sales increased last month by the most since July, economists said a Commerce Department report Jan. 13 will probably show. A rise of 1 percent, the median estimate in a Bloomberg News survey, would follow 0.3 percent gains in each of the previous three months. Auto makers sold 17.2 million vehicles at an annual rate last month, the most since July and up from 15.7 million in November, according to industry reports last week. Dealers boosted incentives through the first half of the month by 13 percent compared with the same period last year, according to Art Spinella, president of CNW Marketing Research in Bandon, Ore. Read more.
GM Chief: End to Job Guarantees Needed
General Motors Corp. Chairman and CEO Rick Wagoner said that he would like to see an end to job guarantees for members of the United Auto Workers union at GM, but he wouldn't comment on his chances to win such a contract change in the 2007 labor negotiations, CNN reported yesterday. Speaking to reporters at the North American International Auto Show in Detroit yesterday, Wagoner said that the job guarantees, known as the "jobs bank," is one of the competitive problems facing the embattled No. 1 automaker as it competes with overseas automakers who don't have those guarantees to employees. The jobs bank pays UAW members who are laid off from GM, Ford Motor Co. and Chrysler Group close to full pay, which has slowed Big Three efforts to close plants and cut excess capacity. Read more.
Five Officials in San Diego Are Indicted Over Pensions
San Diego's legal and financial troubles deepened on Friday as a federal
grand jury handed up fraud and conspiracy indictments against five current
and former officials of the city's pension system, the New York Times reported Saturday. The charges centered on a 2002 decision by the 13-member
San Diego City Employees' Retirement System to enact a plan to increase
significantly the pension benefits of city employees, including all the
defendants, while failing to provide sufficient money to keep the pension
fund solvent. Federal prosecutors said the five defendants had conspired to
hide the details of the proposal from other members of the pension board as
part of a scheme to enrich themselves and cover up the financial danger to
the pension system posed by the plan. The decision helped to push the city
to the brink of bankruptcy and led to the resignation of Mayor Dick Murphy
last spring. The San Diego retirement system now has a deficit of at least
$1.4 billion, and the city is unable to borrow in the capital markets. Read more.
Banks May Post Lackluster 4th - Quarter Results
Many big U.S. banks may post lackluster fourth-quarter results, hurt by
volatile interest rates, increased credit losses and a slowdown in
mortgages, analysts said, Reuters reported yesterday. Larger banks,
including those with big non-U.S. operations, may offset weakness elsewhere
with strength in asset management, investment banking and trading. But
competition intensified for deposits, and a surge in bankruptcy filings may
hurt companies with big credit card operations. Many analysts worry that the
convergence of long- and short-term interest rates may crimp lending
margins. The Fed has increased short-term rates to 4.25 percent from 1
percent since June 2004, but long-term rates have barely budged, and at
times slid below short-term rates. Read more.
Cornell Trading Files for Bankruptcy Protection
Cornell Trading Inc., a clothing and housewares company, filed for chapter 11 bankruptcy protection last week, the Burlington Free Press reported Saturday. Founder April Cornell said that the company hopes to restructure itself quickly and emerge from bankruptcy within four to six months. The move comes two years after the company reorganized and divided its wholesale and retail businesses to prepare for new growth, but officials said that the reorganization led to a drop in sales and increased operating expenses. Most of those employees were hired at a time when company had anticipated new growth. The company does not plan to lay off any more of its 700 employees around the world or close any of its roughly 100 retail stores in the United States or Canada.
Read more.
Era, Investors File for Bankruptcy
With its cash flow cut off by its primary lender, Era Aviation Inc. filed for reorganization under chapter 11 just as 2005 came to an end, the Alaska Journal of Commerce reported Saturday. According to a press release from the airline's Web site, the filing came as a result of a dispute with its lender, CapitalSource Finance LLC, over whether "certain technical financial benchmarks were met." Officials from the airline would not elaborate on what those benchmarks were. In the course of a 10-minute meeting Dec. 27, Era Aviation Inc.'s board of directors voted to file for bankruptcy. According to minutes from the meeting, the special meeting was convened to "discuss the impact of the withdrawal of the Vintage Management Fund Equity Proposal ... and (the) next course of action to protect Era's interests." Landis would not comment on the nature of the equity proposal. Read more.
Company Accused of Mishandling Funds Files for Bankruptcy
A company accused of failing to deposit $2.2 million to public school teachers in Hawaii has filed for bankruptcy protection, the Associated Press reported Saturday. The Hawaii Department of Education in December filed a lawsuit against the California company Plan Compliance Group Ltd. It alleged that the company didn't deposit money deducted from D-O-E employee paychecks into retirement accounts. The state attorney general's office said that it will seek damages. The lawsuit stems from a criminal investigation by the attorney general and the FBI.
Enron's Causey Not Yet On Trial Witness List
Prosecutors in the fraud trial against former Enron Corp. leaders have not yet decided whether to call the Houston company's former accounting chief as a witness, according to court papers filed last week, the Washington Post reported Saturday. Richard A. Causey pleaded guilty to a single count of securities fraud last week. Representatives from the Justice Department's Enron Task Force said at the time that they were continuing to debrief him as a possible witness against former CEOs Kenneth L. Lay and Jeffrey K. Skilling, with whom he was scheduled to be tried. Under the terms of his plea deal, Causey could shave as much as two years off a seven-year prison sentence if prosecutors determine he cooperated with their investigation. Causey's name did not appear on a list of 61 witnesses submitted yesterday by government lawyers. But prosecutors "reserve the right" to add others to the lineup before the Jan. 30 trial, they wrote. Read more.
Construction Debts Sink Gooding's into Chapter 11
Gooding's Supermarkets Inc., the family-owned upscale grocer that was an Orlando icon for decades, has filed for chapter 11 bankruptcy protection, the Orlando Sentinel reported Saturday. According to the company's Dec. 30 petition filed in U.S. Bankruptcy Court in Orlando, the filing was a result of debt Gooding's amassed during the opening and subsequent closing of a supermarket in Celebration, the Osceola County community originally developed by Walt Disney Co. Gooding's shuttered its Celebration store this past October and filed a lawsuit against its landlord, Unicorp National Developments Inc., alleging violations of the lease involving visibility and signs. Read more.
It might be time to say bon voyage to the star-crossed Ocean Jewel, the St. Petersburg Times reported today. Representatives of bankrupt Titan Cruise Lines will take bids this morning on the 450-foot gambling ship. They hope to present the best offer for Bankruptcy Judge Alexander Paskay's approval Wednesday and distribute the proceeds to certain secured creditors. That would mark the final chapter in the ship's tortured history here. Titan announced plans to sail the ship from St. Petersburg, Fla.’s port in December 2002. Various obstacles - including new homeland security rules, U.S. Coast Guard screenings and four hurricanes in Florida—kept the ship from sailing until nearly two years later. Read more.
Bankruptcy Court to Weigh In on Bus Crash Money
A bankruptcy judge could determine this week if some members of a Temple church can still collect $2.5 million for injuries suffered in a 2003 bus crash after they renounced legal claims to the money during testimony in a state court civil trial, the Waco Tribune-Herald reported Saturday. U.S. Chief Bankruptcy Judge Larry E. Kelly has set a hearing for Friday to consider a motion to deny claims filed by half of the 34 members of Memorial Baptist Church in Temple who survived the Feb. 14, 2003, crash or by family members of those who died. Central Texas Trails officials, who owned the charter bus, and its driver, Johnny Cummings, filed for bankruptcy protection shortly after the accident near Hewitt. Five bus passengers and two Waco women in a southbound Chevrolet Suburban that the bus struck after crossing the soggy median in rainy conditions were killed, while others suffered severe injuries. Read more.
International
Bankruptcy for Australian Seafood Shop
The face of the Sam's Seafood group, Nick Noutsatos, has declared himself bankrupt following the collapse of the goods supplier last year, the Australia Courier-Mail reported Saturday. Noutsatos was managing director of stock market-listed Sam's – employing almost 250 people at takeaway outlets, restaurants and retail and wholesale stores – when it was forced into receivership last year. Most of the businesses, which offered goods ranging from reef fish to barramundi spring rolls, have been closed. But buyers have been found for a Gladstone wholesale operation while the retail shop in Brisbane's Hamilton has been bought by Noutsatos' sister and her husband. Nick Noutsatos is understood to have creditors, including his family and the Australian Taxation Office, of $2.9 million. But his potential net assets coming from any property sales would be only $1.6 million. Read more.
London Braced for Another Retail Bankruptcy
Rumours were swirling in London on Friday that another major British retailer was about to go bankrupt as conditions continue to deteriorate on the high street, the U.K. Observer reported yesterday. A number of companies are due to make Christmas trading statements this week, and several of them are expected to confirm that the consumer slowdown is biting hard. At the end of last year, off-licence chain Unwins went bust, as did MVC, the music and video business. The UK arm of fashion chain Kookai went into administration on Tuesday. An analyst, who declined to be named, said,”I wouldn't be surprised if we get a really big bankruptcy in the sector.” Of the companies disclosing trading statements this week, Ratner said that groups such as Matalan, HMV, Signet, Carpetright and Body Shop would probably show a decline in like-for-like sales numbers - the figure that strips out sales from new shops which have opened over the last 12 months. Read more.
Rising Brit Bankruptcies: Now, a Business Problem
Over the past five years, British consumers grew so "extremely comfortable" with using credit cards that, in 2003, the number of active cards on hand exceeded the number of U.K. citizens, BBC News reported Friday. The country remains Europe’s "most developed card market," and consumer debt has been growing at record pace – a trend that United Kingdom’s credit card companies only expect to continue. But last week, a new report brought unexpected news. Both consumer and business bankruptcies in Britain are rising largely for the same reason: the increasing reliance on credit. Analysts say that if it weren’t for the higher interest rates and energy costs, many bankruptcies could have been avoided. Read more.
Asset Manager to Sell Smarte Carte
Black Diamond Capital Management LLC said Sunday will sell Smarte Carte
Corp., which offers airport baggage cart rentals, locker and stroller
services, to Macquarie Bank Ltd of Australia, the Associated Press reported
yesterday. The sale, which is valued at approximately $270 million, is
expected to be completed in the first quarter of 2006, according to the Lake
Forest, Ill.-based asset management company. Privately held Smarte Carte,
based in St. Paul, Minn., operates in about 1,000 locations worldwide.
Christopher Kipley, Black Diamond's managing director, said Smarte Carte was
hindered by poor capital structure when it was acquired out of bankruptcy.
Central Bank of Yemen Downplays Watani Bankruptcy
The Central Bank of Yemen recently stated it is making every effort to collect Watani Bank debts and will pursue bank law in determining its status, the Yemen Times reported Saturday. CBY also mentioned it is assessing assets and obligations of Watani Bank for Trade and Investment for auditing by an international committee. CBY’s statement noted its efforts to raise Watani Bank to the level attained by other Yemeni banks that abided by CBY instructions and became highly efficient in performance, stating that the main reason Watani Bank reached its present level was its administration’s lack of commitment to laws, instructions and monitoring criteria CBY set forth, as well as pledges with CBY signed by Watani Bank’s board of directors. The statement said, “The failure of a bank in the Yemeni banking sector, whose share in the banking market is very small, does not indicate a structural problem in a banking sector characterized by soundness, efficiency and ability to meet its domestic and foreign obligations.” Read more.