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March 3, 2005
Senate Rejects Democrats’ Bid to Soften Bankruptcy Law
Senate Democrats were thwarted yesterday in their attempts to soften
the impact on seniors and sick people of a proposed law making it harder
to erase debts in bankruptcy, the Associated Press reported. Mostly
along party lines, the Republican-controlled Senate voted 59–40 to
reject an amendment that would have allowed older people to get special
homestead exemptions to keep their homes when they file for bankruptcy.
Also rejected, 58–39, were two proposals focused on people whose
significant medical expenses for illness force them to file for
bankruptcy. By another 59–40 tally, the Senate defeated a
Democratic proposal to require that credit card statements show how long
it would take the consumer to pay off his or her debt by making only the
minimum monthly payment. As work on the legislation continues in the
Senate, Kennedy will try to get an increase in the minimum wage—a
top priority of the Democrats—attached to the bill, the newswire
reported.
Multi-employer Pensions Remain Focus for Boehner
House Education and the Workforce Chairman John Boehner
(R–Ohio) yesterday said he welcomed the Bush
administration’s plan to change how traditional company pensions
are funded and managed, but said rules governing retirement accounts
that cover millions of additional workers also need immediate attention,
Reuters reported. Boehner told a hearing that the pension
legislation he will propose will include changes to strengthen
multi-employer systems. Government estimates show that nearly 5 million
workers at U.S. companies participate in multi-employer defined benefit
plans, which are similar to single-employer funds in that they both pay
retirees a fixed monthly amount.
New Tug of War over Excess Pension Cash
Few companies report having more pension money than they need, but
some business advocates have begun urging Congress to let companies tap
any surplus that appears in their pension funds, if and when the good
times return, the New York Times reported. “We think
there needs to be access to the surplus,” said Steven Kerstein,
managing director of the global retirement practice for Towers Perrin, a
large consulting firm. Read the full article at
href='http://www.nytimes.com/'>www.nytimes.com.
GOP Meets on Asbestos as Specter Says Deadline Nears
Senate Judiciary Chairman Arlen Specter (R–Pa.) met with panel
Republicans yesterday—and plans to do so again today,
CongressDaily reported. Specter said he is willing to alter
his bill to suit his Republican colleagues but cautioned that it would
be fruitless to pass a bill through committee on a party-line vote.
“There’s no point in having a Republican bill the way
partisanship is present in the Senate,” Specter said, adding that
he wants a bill that can win 60 votes needed to override a potential
Democratic filibuster. Specter canceled Thursday’s full committee
hearing on asbestos. The bill is still slated for a floor vote by the
week following the Easter recess, he said. “It’s then or
never,” Specter said, although he added that the decision about
timing is up to Majority Leader Bill Frist (R–Tenn.), who called
the meeting yesterday and urged quick action, the newswire reported.
Greenspan: Economy Sound, Spending Curbs Needed
The U.S. economy is growing at a “reasonably good pace,”
Federal Reserve Chairman Alan Greenspan said yesterday, but he warned
dangerous budget deficits must be fixed, preferably through spending
cuts, Reuters reported. “Addressing the government’s own
imbalances will require scrutiny of both spending and taxes. However,
tax increases of sufficient dimension to deal with our looming fiscal
problems arguably pose significant risks to economic growth and the
revenue base,” he said. In his testimony, the Fed chief said the
combination of America’s aging population and soaring health care
costs poses the biggest budget risk, the newswire reported.
U.S. Mergers Boost Layoffs 17 Percent in Feb.
Layoffs at U.S.corporations jumped 17 percent in February to 108,387,
boosted by increased merger and acquisition activity, international
outplacement firm Challenger Gray & Christmas reported yesterday,
CBS MarketWatch reported. Nearly 50,000 of the announced
layoffs, or more than 40 percent, were directly due to mergers, the firm
said. Most of the merger-related cuts were in telecommunications.
“The numbers do not necessarily mean the job market or the
economy are backsliding,” said John Challenger, CEO of the
outplacement firm. “In fact, the cuts are probably more indicative
of an energized economy that is continuing to build momentum. There is a
unique labor market environment where both job creation and job
destruction occur simultaneously,” Challenger said, the newswire
reported.
Citigroup Settles Global Crossing Suit for $75 Million
Citigroup Inc. yesterday said it will pay $75 million to settle a
lawsuit brought by investors over its role in the collapse of
telecommunications network provider Global Crossing Ltd., Reuters
reported. Citigroup, which was one of Global Crossing’s bankers,
was accused in the three-year-old class-action lawsuit of issuing
inflated research reports and failing to disclose conflicts of interest.
It said the settlement, equal to $46 million after taxes, covers
investors in Global Crossing and its Asia Global Crossing Ltd.
Prosecutor Says Ebbers Lied in Fraud Trial
A federal prosecutor told jurors that former WorldCom Chief Executive
Bernard J. Ebbers lied when he denied knowing about or directing the
company’s $11 billion accounting fraud, the Wall Street
Journal reported. In a speech that lasted more than three hours,
Assistant U.S. Attorney William Johnson said Ebbers, under grave
financial pressure, had the motive, know-how and control needed to lead
a conspiracy of financial wrongdoing, the newspaper reported.
Stelco Rejects Takeover Offers, to Seek Financing
Stelco Inc., which is under bankruptcy protection, rejected all
takeover offers for the company late on Tuesday, saying it will instead
pursue other refinancing options and go ahead with the sale of some
units, Reuters reported. The Hamilton, Ontario-based steel company,
which has been undergoing restructuring for more than a year, said in a
release that none of the offers met its financial criteria.
Enron
Enron Tentatively Approves Pension Accord
Enron Corp. has tentatively agreed to settle suits over employee
pension fund claims, according to a published report yesterday, citing
lawyers for the bankrupt energy company and its workers, CBS
MarketWatch reported. Lynn Sarko, a lawyer for Enron workers,
told a judge that under the proposed agreement, Enron would allow a
$356.2 million claim to be made against it in U.S. Bankruptcy Court to
resolve employee suits over pension fund stock losses, Bloomberg
reported on its web site. According to the report, a claim of that size
could result in a $64 million recovery for Enron workers under the
company’s reorganization plan.
Feds: Enron Tapes Surface of Illegal Acts
Audio tapes made public on Tuesday indicate at least 1,500
conversations in which traders employed by Enron Corp. engaged in or
discussed violations of federal regulations, a Federal Energy Regulatory
Commission (FERC) staffer said, the Associated Press reported. Those
tapes, including some collected by a Washington state utility, may have
only scratched the surface of potentially illegal activity by Enron
during the West Coast energy crunch of 2000–2001, the FERC staffer
said in testimony released on Tuesday.
Lender of Last Resort Files Bankruptcy
A company that serves as a lender of last resort for local start-up
companies and nonprofit groups has filed for bankruptcy reorganization,
the Honolulu Star Bulletin reported. The Hawaii Community
Loan Fund (HCLF) filed for chapter 11 reorganization on Feb. 23, listing
assets of nearly $1.8 million and liabilities of $2.2 million. Paul
Rehob, executive director of the nonprofit company, said HCLF ran into
trouble recently after it had to charge off a number of loans that it
made to local entrepreneurs.
Tower Automotive Receives Approval to Fully Access $725 Million
Debtor-in-Possession Financing
Tower Automotive Inc. announced in a press release yesterday that it
received approval on Feb. 28, 2005, from the U.S. Bankruptcy Court for
the Southern District of New York to access the full amount of its $725
million debtor-in-possession financing provided by JPMorgan. As
previously announced, the company received approval to immediately
access $125 million of the financing on February 3, 2005. The company
said that it believes that this financing, in addition to normal cash
flow, will be sufficient to fund its operating needs as it works to
restructure its finances, according to the press release.
Las Americas Broadband Files for Chapter 11 Reorganization
Las Americas Broadband Inc. filed on Feb. 28, 2005, for chapter 11
bankruptcy protection, the company announced in a press release. The
company contemplates a reorganization plan to be submitted to the court
in the next few months.