|
November 20, 2002
Senate Republicans Plan Another Round on Bankruptcy in 108th
Congress
Sen. Orrin Hatch (R-Utah) says he plans to push for bankruptcy
legislation next year similar to the failed conference report from the
107th Congress, CQ Daily Monitor reported. 'We'll have to see how
far we can go with it. But I think we can get it done,' said Hatch, the
incoming chairman of the Senate Judiciary Committee. He said he plans to
work closely with Charles Grassley (R-Iowa) to revive the legislation.
Some Senate Democrats such as Joseph Biden (D-Del.) say they are so
disappointed by the collapse of support in the House for a bipartisan
conference report that they are reluctant to work on the issue next
year. But other Democrats, such as Thomas R. Carper (D-Del.), say they
are willing to work with Republicans to try to cut a deal in 2003.
According to the newswire, Carper said the measure may gain support from
the party's New Democrat wing. Trade groups have given mixed signals in
recent days on whether they plan to push hard for bankruptcy
legislation.
Sen. Charles E. Schumer (D-N.Y.), who sponsored the controversial
abortion provision, said he would continue to press for restricting
bankruptcy filings by abortion protesters who commit crimes. Jeff
Sessions (R-Ala.) said he and other Republicans will work to keep
Schumer's abortion-protester language off the bill next year. 'I think
it may be easier to get it done next year,' he said. 'For one thing we
will have a conference committee that is more favorable.' Social
conservatives are vowing to fight any effort to revive bankruptcy
restrictions similar to the Schumer language. CQ Daily Monitor
reported that Roberta Combs, president of the Christian Coalition of
America, said the demise of the conference report 'should go a long way
to prove to the leaders of the Republican Party that ... we can gain
many victories next year.' A House-passed measure that omitted the
Schumer language is not expected to move in the Senate before Congress
adjourns.
The United States Records $38 Billion Trade Deficit in
September
The United States recorded a $38.03 billion trade deficit in September,
the second highest on record, according to data released yesterday by
the Commerce Department, Congress Daily reported. September's
deficit was just $254 million less than the record of $38.28 billion set
in August, disappointing economists who had been looking for a decline
of up to $1 billion. Foreign oil imports dropped 0.5 percent, which was
the biggest reason for September's decline, and helped offset a 0.4
percent drop in U.S. exports, according to the newswire. This year's
trade deficit remains on track to reach $423 billion by the end of the
year, an amount that would easily exceed the previous record trade
deficit of $378.68 billion. Meanwhile, the department reported that
consumer prices rose by just 0.3 percent last month, as dropping
airfares helped offset the largest increases in gas prices in six
months, reported Congress Daily.
Encompass Services Files for Chapter 11 Bankruptcy
Protection
Encompass Services Corp. filed for bankruptcy protection after slowing
sales and five
straight unprofitable quarters left the biggest U.S. provider of
building services unable to cope with mounting debts, Bloomberg News
reported. Encompass, formed in 2000 through the $678 million merger of
Group Maintenance America Corp. and Building One Services Corp., once
had annual revenue of $3.6 billion, about 30,000 employees and
operations in more than 250 locations. The Houston-based company's
largest clients include General Motors Corp., Wal-Mart Stores Inc. and
WorldCom Inc., according to Hoover's Inc. Encompass's bankruptcy filing
comes as the U.S. office vacancy rate is at a five-year high, reported
Bloomberg. The slowing economy is causing companies to fire workers and
shed real estate space, according to Torto Wheaton Research, the
forecasting arm of CB Richard Ellis Services, the largest U.S.
commercial property broker. Encompass listed $1.23 billion in assets and
$1.76 billion in debts, including more than $339 million of bond debt,
in chapter 11 papers filed today in the U.S. Bankruptcy Court in
Houston. The company said it's negotiating with its bank lenders for a
loan to help fund its reorganization, and it plans to file a recovery
plan with the court by Jan. 1, the newswire reported.
Conseco Expects to File for Bankruptcy Protection After $1.8
Billion Loss
Conseco Inc. said it expects to file for chapter 11 bankruptcy
protection after the
insurance and finance company posted a $1.8 billion loss in the
third-quarter, Bloomberg News reported. The company said in its
third-quarter financial statement that it expects to file for bankruptcy
after negotiations with its banks and creditors to restructure more than
$6 billion in debt.
Dow Jones reported that the financial-services holding company said
in its third-quarter report filed on Tuesday with the Securities and
Exchange Commission that it is still negotiating with its lenders and
holders of its notes and trust securities about a fundamental
restructuring of its balance sheet. If an agreement is reached with
these creditors on the terms of the restructuring, the plan will be
submitted for judicial approval as part of a chapter 11 bankruptcy
filing, the company said. While warning that it can't predict the
outcome of the talks, Carmel, Ind.-based Conseco said that as a result
of its current defaults some company debt holders could file an
involuntary bankruptcy petition against the company, reported the
newswire.
KMART
Kmart CEO Promises Bankruptcy Exit Even If Holiday Sales
Slump
Kmart Corp. Chief Executive James Adamson says this holiday season isn't
the key to whether the discount retailer is able to emerge from
bankruptcy protection as promised by July, Bloomberg News reported.
'People love to talk about the demise of Kmart. The fact of life is it's
going to be around in some way, some shape or form,'' Adamson said. 'We
have to do a lot of things to get this company righted, of which one is
trying to make Christmas better.'' Analysts are less optimistic about
Adamson's plan to use brands such as Martha Stewart housewares and Joe
Boxer clothing, better inventory management and weekly promotions to win
back customers, reported the newswire. A poor showing this holiday
season may prompt creditors and suppliers to push Kmart into
liquidation, they've said, according to Bloomberg.
'The holiday season is so important,'' said Charles Tatelbaum,
a bankruptcy lawyer who represents some of Kmart's suppliers. 'If they
can't keep up with competitors, then it really sends a signal that what
they've been trying to do in chapter 11 is not working.'' 'The odds are
very long against a successful rejuvenation of this retailer,'' said
William Brandt, chief executive of Development Specialists Inc.,
a bankruptcy consulting group.
Kmart Has Received $75 Billion in Final Claims
Kmart Corp., which filed for federal bankruptcy protection earlier this
year, has received about $75 billion in gross final claims, an attorney
for the company said in open court on Tuesday, Dow Jones reported.
Jack Butler, addressing Chief Judge Susan Pierson Sonderby during
a routine monthly hearing in Chicago, said the discount retailer expects
that the net total will be 'considerably less' than $10 billion after
the elimination of duplicate claims and negotiations with involved
parties in upcoming months.
Troy, Mich.-based Kmart had indicated in earlier court documents that it
expected about $6 billion in net claims.
Dynegy Surges After CEO Williamson Says Company Can Pay
Debts
Dynegy Inc. shares surged as much as 55 percent after chief executive
Bruce Williamson said the energy trading company should generate enough
cash to meet almost
$2 billion of debt obligations next year and avoid bankruptcy, Bloomberg
News reported. The shares were up 52 percent to $1.17 as of 1 p.m. in
New York Stock Exchange composite trading, after touching $1.19. They
have fallen 97 percent in the past year and the company may be de-listed
by the exchange because its stock price has been too low. Dynegy, the
onetime suitor of bankrupt rival Enron Corp., has been using up cash as
energy trading collapsed and its credit rating was cut to below
investment grade, reported Bloomberg. Free cash flow, which fell by $1
billion in 2001, dropped $318 million in the second quarter. Dynegy
bonds fetch less than half of their face value. 'We are not in a
bankruptcy mode, we are in a restructuring mode,'' Williamson said on a
conference call with analysts. The Houston-based company has bolstered
liquidity by 'a substantial margin'' through asset sales and job cuts,
he said, the newswire reported.
WORLDCOM
WorldCom, UAL Ask Bankruptcy Judge to End Joint Mileage
Program
WorldCom Inc. and UAL Corp. are asking a bankruptcy judge to approve an
agreement to end a program allowing WorldCom customers to earn airline
miles for
money spent on long-distance phone service, Bloomberg News reported.
Under the settlement reached last month, WorldCom's MCI Communications
Corp. and UAL will wind down their partnership over the next several
months and terminate it on Feb. 28, court papers said. U.S. Bankruptcy
Judge Arthur Gonzalez will be asked to
approve the agreement on Nov. 26. UAL, the parent of United Airlines,
sought to end the partnership on July 19, two days before WorldCom filed
for chapter 11 bankruptcy. WorldCom objected and sought to arbitrate the
dispute. The settlement was reached without arbitration, court papers
said, the newswire reported.
WorldCom Wins Approval To Scrap 30 Fiber Optic
Links
WorldCom Inc. can abandon 30 of its unused high-speed fiber optic
systems in major cities across the country as the second-largest U.S.
long-distance telephone company tries to cut costs to reorganize under
bankruptcy-law protection, a federal judge ruled on Tuesday, Dow Jones
reported. WorldCom has sought to cancel contracts involving all of the
49 vacant fiber optic links to save about $18 million over the lives of
the pacts. But the Clinton, Miss.-based company has yet to resolve
contract issues with several local phone companies regarding the
remaining 19 such links, called SONET rings, the newswire reported.
Judge Arthur Gonzalez, who oversees WorldCom's chapter 11 proceeding in
New York, scheduled for Dec. 3 a hearing regarding the remaining 19
unused fiber optic links WorldCom sought to cancel.
United Nears Machinists Deal; Awaits Word on Loan
Guarantee
United Airlines is nearing an agreement with its machinists union on
wage cuts that could provide the biggest boost yet for its bid to stave
off bankruptcy, the Associated Press reported. Still unknown is whether
shedding more than $1 billion in annual labor costs will help solve its
immediate cash quandary and keep its overhaul plan out of bankruptcy
court. United says it faces a chapter 11 filing if it doesn't secure a
$1.8 billion loan guarantee soon from the government's Air
Transportation Stabilization Board. United and union leaders
representing mechanics and ground workers said on Monday they were close
to a tentative accord with those 36,000 employees, even as the airline's
pilots announced ratification of their own 18 percent pay cuts and $2.2
billion in cost reductions over 5 1/2 years. The flight attendants'
union approved a tentative deal earlier this month, leaving the
International Association of Machinists as the only employee group not
to have committed to its share of $5.8 billion in labor cutbacks -- the
centerpiece of United's financial recovery plan, the newswire
reported.
Sunbeam Swings to Profit Despite Revenue Decline
Sunbeam Corp. reported third-quarter net income of $662,000, or 1 cent a
share, a swing from the $27.7 million, or 26 cents a share, net loss for
the third quarter last year, Dow Jones reported. In the consumer product
maker's report for the quarter ended Sept. 30, filed on Tuesday with the
Securities and Exchange Commission, Sunbeam posted $474.3 million in
third-quarter net sales, a drop from the $484.5 million in net sales
reported for the same quarter last year, the newswire reported.
Excluding business lines that have been sold or exited, the company
reported a 1 percent decrease in adjusted net sales for the third
quarter as compared with the same quarter in 2001. For the nine months
ended Sept. 30, Sunbeam reported a $167.4 million, or $1.56 a share, net
loss, wider than the $115 million, or $1.08 a share, net loss for the
same period in 2001. In the SEC filing, Sunbeam said its unsecured
creditors as a class voted in favor of its chapter 11 reorganization
plan, meaning they will be entitled to their pro rata share of $1
million, the newswire reported. Also voting in favor of the plan was the
class comprising the company's secured creditors. Sunbeam and its
affiliates filed for chapter 11 bankruptcy protection on Feb. 6, 2001,
listing assets of just less than $3 billion and liabilities of $3.2
billion.
Sleepmaster Pulls Chapter 11 Plan As Exit Lender Scraps
Deal
Sleepmaster LLC withdrew its disclosure statement for a plan of
reorganization on Tuesday after its exit lender decided to scrap the
deal, Dow Jones reported. The move leaves the chapter 11 case of
Sleepmaster with just one disclosure statement, which was submitted by
its committee of unsecured creditors. A hearing to consider approval of
the adequacy of the creditor panel's plan will reconvene today.
Sleepmaster and the creditors' committee had opposed each other's plans
and disclosure statements. Judge Mary F. Walrath of the U.S. Bankruptcy
Court in Wilmington, Del., was supposed to consider both statements on
Tuesday. 'Due to conversations the investor had with the committee and
the committee's lack of cooperation, they have withdrawn their offer,'
said Laura Davis Jones, an attorney with Pachulski Stang Ziehl Young
& Jones, the firm representing the debtor company. Jones added that
Sleepmaster is 'very discouraged' with the situation.
Polaroid Estate, Creditors Win Extension of Exclusivity
The chapter 11 estate of the entity formerly known as Polaroid Corp. on
Friday won a two-month extension of the periods during which it has the
exclusive right to file a reorganization plan and solicit acceptances of
the plan, Dow Jones reported. The debtor will use the time to continue
negotiating the terms of a reorganization or liquidation plan with its
committee of unsecured creditors, according to court documents. As under
a previous court order, the creditors' committee shares the exclusive
right to file a plan and obtain votes for the plan with the debtor
entity. The chapter 11 estate of former Polaroid and the creditor panel
have the exclusive right to file a plan through Dec. 20 and the sole
right to obtain votes for the plan through Feb. 18, according to the
order signed by Chief Judge Peter J. Walsh of the U.S. Bankruptcy
Court in Wilmington. Polaroid filed for chapter 11 protection with 20
affiliates on Oct. 12, 2001, listing consolidated assets of $1.81
billion and liabilities of $948 million as of July 1, 2001.
Orius Wins Interim Court OK for Debtor-In-Possession Loan
Orius Corp. has won interim bankruptcy-court approval for a $32 million
debtor-in-possession loan that will help fund the company's operating
needs while it restructures under chapter 11, Dow Jones reported. Orius
said in court papers obtained by Dow Jones Newswires that without
immediate access to additional financing, it won't be able to pay
subcontractors or buy critical goods it needs to continue operating its
business. The company builds telecommunications and broadband
infrastructure for local and long-distance telecommunications companies,
cable television companies, long-distance companies and commercial
customers. It filed a prepackaged chapter 11 case on Friday with the
U.S. Bankruptcy Court in Chicago.
Thanks for visiting Today's Bankruptcy Headlines. New articles
are posted here each business day.
|
