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March 11, 2009
House Panel to Examine
Circuit City Bankruptcy, Chapter 11 Issues
The House Judiciary Subcommittee on Commercial and
Administrative Law will be holding a hearing today at 2 p.m. ET titled,
“Circuit City Unplugged: Why Did Chapter 11 Fail to Save 34,000
Jobs?” Witnesses testifying at the hearing include ABI Resident
Scholar Prof.
size='3'>Jack Williams of Georgia State
University, Richard M.
Pachulskiof Pachulski Stang Ziehl & Jones,
LLP (Los Angeles),
face='Times New Roman' size='3'>Harvey R. Miller
size='3'>of Weil, Gotshal & Manges, LLP (New York), Daniel B.
Hurwitz of the Developers Diversified Realty Corp. on behalf of
International Council of Shopping Centers (Beachwood, Ohio),
Prof.
size='3'>Todd J. Zywicki of the George Mason
University School of Law (Arlington, Va.) and
face='Times New





Roman'>
face='Times






New
Roman'
size='3'>Isaac M. Pachulski of Strutman,
Treister & Glatt Professional Corporation on behalf of National
Bankruptcy Conference (Los Angeles).
href='http://judiciary.house.gov/hearings/hear_090311_1.html'>Click
here to read their prepared testimony.
Mortgage Lending Reform
Targeted by Congressional Panel
The House Financial Services Subcommittee on Financial
Institutions and Consumer Credit will hold a hearing today at 2:30 p.m.
ET. The committee will be examining the current state of the U.S.
mortgage system with an eye toward comprehensive mortgage reform
legislation that the Financial Services Committee is expected to take up
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr0311092.shtml'>Click
here to view the witness list and find a link to view the live
Webcast of the hearing.
Million in Professional Fees to Date
Bankrupt Lehman Brothers Holdings Inc. yesterday said
that it has paid out more than $40 million in professionals' fees so far
in its chapter 11 proceedings,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported. That figure is likely to grow rapidly in yhe coming
days ahead of a March 15 deadline for initial fee applications, and it
could ultimately approach or exceed $1 billion, experts say. Tuesday's
monthly operating report did not include bills paid to lead bankruptcy
counsel Weil Gotshal & Manges LLP or several other major law,
accounting or consulting firms working on the largest bankruptcy case in
U.S. history.
href='http://bankruptcy.law360.com/articles/90966'>Read
more. (Registration required.)
Senators Unveil Financial
Product Regulation Bill
Sens. Charles Schumer (D-N.Y.) and Dick Durbin
(D-Ill.) yesterday unveiled legislation that would create a consumer
protection agency, similar to the Consumer Product Safety Commission,
responsible for regulating financial products,
face='Times New Roman' size='3'>CongressDaily
size='3'>reported. The Senators said thattheir bill was needed to
protect consumers from the predatory mortgage loans and abusive credit
card practices that have contributed to the economic crisis. Under the
bill, a new Financial Product Safety Commission will be created with a
five-member panel appointed by the president and confirmed by the
Senate. The new agency would have lead authority to make rules covering
the sale of financial products, including the ability to ban abusive,
unfair or deceptive offerings. It would also coordinate enforcement
among all other federal financial regulators, though state attorneys
general would have similar powers. The bill would not prevent states
from setting higher levels of protection. Funding for the new agency
would come through the appropriations process, not agency fees. Reps.
William Delahunt (D-Mass.) and Brad Miller (D-N.C.) have sponsored a
companion bill in the House.
Builders
Sales of used homes are actually rising in some
regions because of foreclosures, but new-home sales fell to a
four-decade low in January, down 77 percent from their peak in summer
2005, the
size='3'>Wall Street Journal reported today.
Homebuilders sold houses at a seasonally adjusted annual rate of 309,000
units in January, down from a peak of 1.4 million in July 2005.
Homebuilders are confronting the competition from foreclosures at a
difficult time in their history. Small builders are dying by the dozens,
while some large companies are staying afloat by cutting expenses and
scrambling to restructure debt.
href='http://online.wsj.com/article/SB123672707657288607.html'>Read
more. (Registration required.)
SEC Considers Reinstituting
“Uptick Rule”
The Securities and Exchange Commission (SEC) will
consider as soon as next month restoring a rule that puts the brakes on
short-selling in falling markets, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The SEC is expected to propose bringing back
the 'uptick' rule, which prevented traders from initiating a short sale
unless the price of a stock in its most recent trade was higher than the
previous price. In a short sale, investors borrow shares and sell them,
hoping for the price to fall. The uptick rule was initially created
following the stock market crash of 1929 to prevent bearish investors
from ganging up on shares. After years of economic studies that showed
the rule wasn't having an impact on market volatility, the SEC abolished
it in 2007, around the time financial turmoil was getting under
way.
href='http://online.wsj.com/article/SB123670796893885821.html'>Read
more. (Registration required.)
Some Banks, Citing Strings,
Want to Return Federal Aid
Some bankers say that the conditions of receiving
federal bailout funds have become so onerous that they want to return
the bailout money, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. The list includes small banks like the TCF
Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette,
La., as well as giants like Goldman Sachs and Wells Fargo. Financial
institutions that are getting government bailout funds have been told to
put off evictions and modify mortgages for distressed homeowners. They
must let shareholders vote on executive pay packages, slash dividends,
cancel employee training and morale-building exercises, and withdraw job
offers to foreign citizens. The conditions are necessary to prevent Wall
Street executives from paying lavish bonuses and buying corporate jets,
some experts say, but others say the conditions go beyond protecting
taxpayers and border on social engineering.
href='http://www.nytimes.com/2009/03/11/business/economy/11bailout.html?ref=business&pagewanted=print'>Read
more.
Plummeting Sales Forces
Milacron into Chapter 11
Milacron Inc., a supplier of plastics-processing
technologies and industrial fluids, has filed for chapter 11 protection,
citing an extreme drop-off in orders in recent months amid the global
economic crisis,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The bankruptcy filings include only
Milacron’s Canadian and U.S. operations, not its European or Asian
units. Milacron said it had reached a financing commitment with Avenue
Capital Group and DDJ Capital Management LLC. The two together hold
about 78 percent of Milacron’s stock. Under the agreement, Avenue
Capital and DDJ will enter into an $80 million debtor-in-possession
agreement, which will provide Milacron some $40 million in new
funding. Read
more. (Registration required.)
Liquidity Crisis Drives RV
Maker Fleetwood to Chapter 11
Fleetwood Enterprises Inc., which makes and sells
recreational vehicles and prefabricated housing units, has filed for
chapter 11 protection, citing a liquidity crisis sparked by eight
straight years of operating losses and general decline in Fleetwood's
product markets,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Fleetwood will continue to operate its home
and RV divisions while searching for potential buyers for all or part of
the units. The company will shutter its travel trailer division, closing
three manufacturing plants and laying off 675 employees, in addition to
65 corporate associates. Fleetwood's consolidated balance sheet claimed
assets of $558.3 million against $518 million in liabilities.
Liabilities include $61.7 million in undrawn letters of credit, $81.4
million in aggregate principal amount on recently issued 14 percent
senior secured notes and $151.3 million for 6 percent trust preferred
securities.
href='http://bankruptcy.law360.com/articles/90829'>Read
more. (Registration required.)
Ponzi Scheme
Bernard L. Madoff is facing life in prison for
operating a vast Ponzi scheme that began at least 20 years ago and
consumed billions of dollars, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. While his fate will not be certain until he is
sentenced, his lawyer told a federal judge yesterday that he intended to
plead guilty on Thursday to all the criminal charges that federal
prosecutors had filed against him — a list that could yield a
prison sentence of 150 years. Madoff was arrested Dec. 11 at his
Manhattan home by federal agents who accused him of running what was
perhaps the largest fraud in Wall Street’s history. The charges,
made public yesterday, raised its price tag from his own estimate of $50
billion to nearly $65 billion, the total amount that thousands of
customers were told they had in their accounts at his firm.
href='http://www.nytimes.com/2009/03/11/business/11madoff.html?_r=1&hp=&pagewanted=print'>Read
more.
Analysis:
Citigroup's Long History of Overreach, Then
Rescue
Citigroup, with the help of tens of billions of
dollars in government aid, is now dismantling itself, leaving behind a
company that will resemble the old Citicorp, a bank focused on serving
multinational corporations, the
face='Times New Roman' size='3'>Washington Post
size='3'>reported today. Citigroup’s market value, more than $140
billion at the time of its merger with Travelers Group in 1998, is now
well below $10 billion. Ben S. Bernanke, chairman of the Federal
Reserve, reiterated yesterday that large banks like Citigroup will
receive all necessary public support to survive. Treasury Secretary
Timothy F. Geithner repeated the point yesterday, but refused to say
that a failure was impossible. Still, the government in recent days has
increasingly moved toward a position of guaranteeing the survival of
certain private companies, including Citigroup.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/03/10/AR2009031003391_pf.html'>Read
more.
Be Shut Down for Seattle Newspaper
The print operations at Seattle’s oldest
newspaper, the
size='3'>Seattle Post-Intelligencer, are
likely to be shut down soon amid the economic downturn,
the
face='Times New


Roman'
size='3'>Wall Street Journal reported today.
Hearst Corp., publisher of the 146-year-old
face='Times New
Roman'>Post-Intelligencer, is
expected as early as this week to stop publishing the paper and move it
to an online-only format. Hearst reportedlyplans to keep about one-tenth
of its existing 160 newsroom staff for its online publication, plus some
advertising sales personnel. The publisher had also been considering
shutting the paper entirely.
href='http://online.wsj.com/article/SB123673662900091009.html'>Read
more. (Registration required.)
International
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