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Senate Judiciary Readies To Mark Up Class Action Reform
Class action reform legislation is slated to be marked up on Thursday by
the Senate Judiciary Committee, a committee spokeswoman confirmed,
CongressDaily reported. A class action markup will add to a
Judiciary Committee agenda already occupied with asbestos litigation
case management. Senate Judiciary Chairman Orrin Hatch (R-Utah) has said
he wants to draft such a bill over the April recess, in preparation for
a markup shortly after senators return from the break.
Tonight's asbestos 'summit,' which was organized by Sen. Christopher
Dodd (D-Conn.), and will include senators from both sides of the aisle,
is expected to focus more on the substantive differences within the
interested parties among industry, labor and the legal sectors, reported
the newswire. In remarks on Monday to a conference for investors hosted
by Deutsche Bank in New York City, Sen. Thomas Carper (D-Del.) said,
'The best way to get the economy moving again -- is to invest in
solutions for asbestos litigation, class action reform and bankruptcy
reform,' reported the newswire.
US Airways to Buy Small Jets in Next Month; Congress Likely Will
Appropriate Money for Airlines
US Airways Group Inc., which exited bankruptcy yesterday, will purchase
100 new, small jetliners to expand flight capacity at a lower cost,
allowing it to better compete with East Coast discount carriers,
Bloomberg News reported. The airline expects to place an order in the
next 30 days with either Bombardier Inc. or Empresa Brasileira de
Aeronautica SA for 50 50-seat jets and 50 70-seat jets, plus options to
purchase another 100 of each aircraft, said US Airways CEO David Siegel,
reported the newswire.
US Airways leaves bankruptcy as planned with the help of a $1 billion
U.S.-backed loan eight months after filing for chapter 11 protection in
August amid an industrywide slump in air travel. The decline may push
AMR Corp.'s American Airlines into bankruptcy as early as this week if
the world's largest carrier fails to reach cost-cutting agreements with
its unions.
Separately, CongressDaily reported that House and Senate
appropriators will mark up their respective versions of the FY03 wartime
supplemental today, with both bills likely to carry some type of an
airline assistance package that would be paid for outside of the $74.7
billion request for defense, homeland security and international aid.
Sources said the package would likely be in the $2 billion to $3 billion
range, reported the newswire.
Kmart to Cut 660 Jobs as It Plans to Exit Bankruptcy
Kmart Corp. said it will eliminate 660 corporate jobs as it prepares to
exit bankruptcy proceedings next month, Bloomberg News reported. Kmart
will fire about 400 workers from its Troy, Mich.-based headquarters, 123
support staff, and leave 137 positions vacant, the company said in a
statement distributed by PRNewswire. The job cuts will reduce annual
expenses by $150 million, Kmart said. The retailer, which said earlier
this year it plans to fire as many as 37,000 workers, needs fewer
employees because it has been closing stores, the company said. Kmart is
closing about 316 stores after shuttering 283 in the first half of last
year as part of a plan to exit bankruptcy by the end of April. Kmart
will have about 1,500 stores after the closings, reported the
newswire.
HealthSouth Fires CEO, Auditor Ernst & Young
HealthSouth Corp. fired Chairman and CEO Richard Scrushy and auditor
Ernst & Young LLP, Bloomberg News reported. The company will seek
repayment of bonuses from Scrushy if HealthSouth has to restate
financial statements and also asked him to resign as a director. The
U.S. Securities and Exchange Commission on March 19 charged HealthSouth
and Scrushy with inflating earnings by $1.4 billion since 1999, reported
the newswire. HealthSouth is trying to avoid bankruptcy as charges mount
against company executives. Former Chief Financial Officers William
Owens and Weston Smith have pleaded guilty to criminal charges, reported
the newswire.
Horizon PCS May File for Bankruptcy Amid Rising Costs
Horizon PCS Inc. is facing a loan default and possible bankruptcy after
its fourth-
quarter net loss widened on higher expenses, Bloomberg News reported. A
default would allow lenders to demand swifter repayment, triggering a
cash shortage, Horizon said in a statement. The company, with $516.3
million in long-term debt and cash and equivalents of $86.1 million,
hired investment-banking firm Berenson & Co. to help it restructure
debt and weigh asset sales. Horizon said its loss widened to $57.2
million from $38.1 million a year earlier, partly because of an
unexpected rise in the fees Sprint charges for network use, reported the
newswire.
UAL Seeks To Drop Pilots From Contract Rejection Motion
UAL Corp. on Monday asked for court permission to drop its pilots union
from an earlier request to reject all existing union contracts to an
agreement reached by the two sides late last week, Dow Jones reported.
UAL on March 27 announced a restructuring agreement with the Air Line
Pilots Association that would cut more than $6 billion in labor expenses
over the next six years. The union has sent the deal out for
ratification by its membership. The vote is expected to be completed by
April 11, reported the newswire.
U.S. Supreme Court Rules on Cancellation of Bankruptcy
Debt
The U.S. Supreme Court made it harder for people and companies in
bankruptcy to cancel an obligation to pay a settlement of a fraud claim,
Bloomberg News reported. The court ruled 7-2 that the federal bankruptcy
law's ban on canceling debts of money obtained by fraud can also keep
people from getting out of a promise to pay a fraud settlement.
Still, the justices' ruling in a North Carolina case left open a
chance for avoiding payment on other grounds, reported the newswire. The
justices told a lower court to hear additional arguments by Arlene
Warner, who seeks to cancel a $100,000 debt. She says Elliott and Carol
Archer promised in a settlement not to pursue their fraud claim, and
that state law also barred their claim. Warner's attorneys, Donald Ayer
and Jay Campbell, said yesterday's ruling may lead people and companies
who reach settlements of fraud claims to include language intended to
head off disagreements in case the paying side winds up in bankruptcy,
reported the newswire.
AMR Reaches Agreement With Negotiators for Flight Attendants
AMR Corp.'s American Airlines reached agreement with negotiators for its
flight attendants, leaving its pilots as the only group that hasn't
contributed to $1.8 billion in savings AMR has said it needs to help
avoid bankruptcy, Bloomberg News reported. The Association of
Professional Flight Attendants said its negotiators approved a $340
million agreement that must be approved by the union board before being
sent to members for a vote. Earlier yesterday, the airline agreed with
its mechanics, the last of eight groups represented by the Transport
Workers Union. The Transport Workers would provide $620 million in
savings, reported the newswire.
U.S. Steel Gets Antitrust Clearance for National Steel
Assets
U.S. Steel Corp., which is vying with rival AK Steel Holding Corp. for
the assets of
bankrupt National Steel Corp., said its offer was cleared by U.S
antitrust regulators, Bloomberg News reported. National Steel and a
bankruptcy judge have said they prefer AK Steel's $1.13 billion offer to
U.S. Steel's $950 million bid. Both offers are contingent upon winning a
new labor contract with National's steelworkers. U.S. Steel, North
America's largest steelmaker, has until April 10 to top AK Steel's
offer. U.S. Steel Chief Executive Thomas Usher has said National should
accept his bid because he can negotiate with the union, which has been
in dispute with AK Steel over a three-year lockout of workers at a plant
in Ohio, reported the newswire.
WorldCom's Accounting Errors Will Total $11 Billion, People
Say
WorldCom Inc. has uncovered $11 billion in overstated earnings, $2
billion more than what has been publicly disclosed, people familiar with
the matter said, Bloomberg News reported. WorldCom likely will announce
by June that it will restate earnings to reflect the errors, which date
back to 1999, people familiar said. WorldCom doesn't expect to find
additional errors, the people said. Federal prosecutors are trying to
build a criminal case against former CEO Bernard Ebbers and have already
charged ex-Chief Financial Officer Scott Sullivan with securities fraud,
reported the newswire.
Peregrine Files Revised Plan to Benefit Creditors
Peregrine Systems Inc. revised its proposed recovery plan to distribute
less stock to
shareholders and give more options to some creditors, Bloomberg News
reported. Under the company's original plan in January, 90 percent of
the stock in the reorganized company would have gone to current
shareholders, Bloomberg reported. The new plan would give shareholders
at least 56 percent of the stock and bondholders as much as 34 percent,
Peregrine said in a statement. The company's unsecured creditors still
do not support the plan, Peregrine said. The company filed for chapter
11 protection in September to deal with $607 million in debt and resolve
accounting problems that led to investigations by the U.S. Securities
and Exchange Commission and the Justice Department, the newswire
reported.
Fleming Says It Has Doubts About Financing for Future
Fleming Cos., plagued by the loss of its biggest customer and facing a
federal investigation into accounting irregularities, said it faces an
uncertain future unless it can secure new financing, the Wall Street
Journal reported. The Lewisville, Texas-based company said it was
unlikely that its present lenders would extend new credit, and is
talking to its suppliers and new lenders about helping to ease its
liquidity crunch. Without the new financing, Fleming said its 2002
financial statements will include its auditors' doubt about the
company's ability to continue as a going concern. Fleming has asked the
Securities and Exchange Commission for a 15-day extension to file its
annual financial results for the year ended Dec. 28, which were due on
Friday, reported the online newspaper.
Alterra Healthcare Gets Approval To Implement Bonus Plan
Alterra Healthcare Corp. on Friday won authority to implement a bonus
program aimed at encouraging employees it deems critical to its
operations to stay with the company during its time in chapter 11
bankruptcy, Dow Jones reported. The order, signed by Judge Mary F.
Walrath of the U.S. Bankruptcy Court in Wilmington, Del., allows Alterra
Healthcare to establish a bonus pool of $500,000 to be distributed to
about 30 eligible employees. Alterra Healthcare will pay the bonuses
following confirmation of a reorganization plan, reported the newswire.
As reported, Alterra Healthcare filed a proposed chapter 11
reorganization plan on Thursday.
Judge Denies Wherehouse Entertainment's $45 Million DIP Loan
A bankruptcy judge on Monday denied approval of a $45 million
debtor-in-possession financing facility for music retailer Wherehouse
Entertainment Inc. and suggested that the company instead battle for
continued use of its pre-petition lender's cash collateral, Dow Jones
reported. Chief Judge Peter J. Walsh of the U.S. Bankruptcy Court
in Wilmington, Del., said the proposed loan provisions are onerous and
would create a situation that is not necessarily in the best interest of
the company's creditors. The judge said the provisions would result in
Wherehouse Entertainment's chapter 11 bankruptcy case being run by
Congress Financial Corp., the proposed DIP lender from which the company
also borrowed before it filed for bankruptcy protection, reported the
newswire. Wherehouse Entertainment has been using Congress Financial's
cash collateral to fund its operations since its Jan. 20 bankruptcy
filing, but Congress Financial has opposed long-term use of the cash
collateral.
HomeGold Financial Inc. Files Chapter 11
HomeGold Financial Inc. filed for chapter 11 bankruptcy protection after
it couldn't make payments on a loan from one of its units, Dow Jones
reported. The home equity lender said the missed payment caused Carolina
Investors Inc. to miss its own obligations to notes and debentures
holders, and the unit hasn't conducted any business since March 21.
HomeGold Financial said it is aiming to complete the reorganization as
quickly as possible, reported the newswire. Last April, the company's
auditor raised doubt about its ability to stay afloat, citing recurring
losses and a shareholders' deficit.
Wheeling-Pittsburgh Expects To Post $57.6 Million 2002 Net Loss
Wheeling-Pittsburgh Corp. expects to report a $57.6 million net loss for
2002, according to a notice filed on Monday with the Securities and
Exchange Commission, Dow Jones reported. The steelmaker's expected loss
would be narrower than the $172.2 million net loss the company reported
for 2001. The company said it expected to report a narrower 2002
operating loss--$47.4 million--compared with its $164.3 million
operating loss for 2001, reported the newswire. Wheeling-Pittsburgh
filed for chapter 11 on Nov. 16, 2000, in the U.S. Bankruptcy Court in
Youngstown, Ohio, because it wasn't able to meet debt obligations.
Conseco Had Net Loss of About $7.4 Billion in 2002
Conseco Inc. said it had a net loss of about $7.4 billion in 2002,
Bloomberg News reported. The insurer included the estimated loss in a
filing with the U.S. Securities and Exchange Commission that seeks more
time to release its 10-K, including detailed financial results. Conseco
lost $6.15 billion in the first three quarters and about $1.25 billion
in the last quarter, said spokesman Jim Rosensteele. Conseco expects to
emerge from bankruptcy in June, having sold Conseco Finance Corp., its
mobile-home lender, to a General Electric Co. unit and a venture-capital
firm for $1.37 billion. The company's 1998 purchase of the lender, then
known as Green Tree Financial Corp., left it saddled with debt and
bigger-than-expected loan losses as borrowers struggled to pay their
debts in the 2001 U.S. recession, reported the newswire.
Altria Verdict Unnerves Market With Possible Bankruptcy
Filing
A court order forcing Altria Group Inc.'s Philip Morris USA unit to post
a $12 billion bond to appeal an Illinois tobacco verdict is worrying
Wall Street, state governments and credit-rating agencies, the Wall
Street Journal reported. Those institutions are concerned that the
cigarette division will come under severe pressure, and may even be
forced to file for bankruptcy-court protection. While a bankruptcy
filing is considered a long shot, according to the Journal,
Moody's Investors Service cut the debt rating on Altria by two notches
to three levels above 'junk,' reported the online newspaper.
Genaissance Pharmaceuticals To Buy Assets Of DNA Sciences
Genaissance Pharmaceuticals Inc. agreed to buy substantially all of the
assets of privately held DNA Sciences for $1.3 million, as DNA Sciences
files for chapter 11 bankruptcy protection, Dow Jones reported. In a
press release today, Genaissance said DNA will seek bankruptcy court
approval for the pre-negotiated asset purchase agreement. The company
agreed to buy substantially all of DNA Sciences' assets for cash and
stock, and expects the deal to close within 60 days, reported the
newswire.
StemCells Auditor Doubts Company Can Remain Going Concern
StemCells Inc. auditor Ernst & Young raised substantial doubt about
the company's ability to remain a going concern, citing the company's
ongoing operating losses and negative cash flows since inception, Dow
Jones reported. In its annual report filed on Monday with the Securities
and Exchange Commission, StemCells said it posted a loss of $11.6
million, or 46 cents a share, for 2002, versus a net loss of $5 million,
or 22 cents a share, for 2001. The company said its existing capital
resources aren't sufficient to fund its operations through the end of
the second quarter of 2003. StemCells said it may be required to
initiate bankruptcy proceedings if it exhausts its cash balances and is
unable to realize adequate financing, reported the newswire.
Bankruptcy Fears Take Air Canada Shares To New Lows
Air Canada shares slid to a new 52-week low on Monday on growing
concerns it could file for bankruptcy protection, Dow Jones reported.
The Toronto Star reported on Monday that the Canadian government
is considering C$300 million to C$500 million in financial assistance if
the company files under the Companies' Creditors Arrangement Act.
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