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March 17, 2010

Senate Hearing Focuses on Possible Bankruptcy
Reforms to Help Small Businesses

The Senate Judiciary Subcommittee on Administrative Oversight and the
Courts will hold a hearing today at 10 a.m. ET titled 'Could Bankruptcy
Reform Help Preserve Small Business Jobs?' 
href='http://judiciary.senate.gov/hearings/hearing.cfm?id=4471'>Click
here for the witness list and link to a
live Webcast of the hearing.

Real Estate Developer Close to Case
Dismissal

Barring a last-minute objection, DH Orchard Ltd.'s bankruptcy case
will be dismissed today at the request of U.S. Trustee Charles
McVay, the Deal Pipeline reported yesterday. McVay, a U.S.
Trustee for the Western and Southern Districts of Texas, on Feb. 24
called for the case to be dismissed because the real estate developer no
longer has assets to reorganize or liquidate. McVay's motion can be
approved by Judge Craig A. Gargotta of the U.S. Bankruptcy Court
for the Western District of Texas without a hearing after 21 days if no
creditors file an objection in the interim. As of yesterday, McVay's
motion remained unopposed.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005402907'>Read
more. (Subscription required.)

Fed Affirms Plan to End Mortgage
Intervention

The Federal Reserve yesterday affirmed its plan to stop buying
mortgage-backed securities, expressing a degree of confidence that it
could eliminate that pillar of support without undermining the
nation’s economic recovery, the New York Times reported
today. The move came as the Fed voted to keep its benchmark interest
rate unchanged, at nearly zero percent, citing evidence of economic
weakness and little sign of inflation. The Fed’s purchases of
mortgage-backed securities, which will total $1.25 trillion and end
March 31, have helped hold mortgage rates to near-record lows, and the
Fed left open the possibility that the purchases might have to be
resumed, particularly if the housing recovery stalls. The Fed said it
would “continue to monitor the economic outlook and financial
developments and will employ its policy tools as necessary to promote
economic recovery and price stability.”
href='http://www.nytimes.com/2010/03/17/business/17fed.html?ref=business'>Read
more.

Analysis: As Lawmakers Grapple with
Financial Overhaul, They Call for Studies

Calling for studies is the regimen prescribed by both the House and
the Senate bills proposing a regulatory overhaul of the banking and
financial industries, according to the New York Times today.
Rather than immediately putting in place regulatory fixes for some of
the problems that contributed to the financial crisis, the two bills
each call for dozens of studies that will effectively delay for up to
two years the possibility of addressing those problems through new laws
or industry regulations. For example, the Senate and House bills call
for four to six separate studies of up to 30 months’ duration of
how credit ratings agencies work, how they are compensated and what can
be done to make their ratings more relevant to investors. Several of the
studies focus on proposals that are vigorously opposed by banking
industry groups or Wall Street firms, like a change that would make
stock brokers subject to the same fiduciary standards as financial
advisers.
href='http://www.nytimes.com/2010/03/17/business/17regulate.html?ref=bus'>Read
more.

New Visteon Reorganization Plan Would Save
Pensions

Visteon Corp. on Monday filed a new reorganization plan in bankruptcy
court that will enable the struggling auto supplier to keep its pension
plans, the Detroit Free Press reported today. The plan has
reallocated the company’s assets to offer a recovery to unsecured
creditors, paving the way for the company to keep its pensions. In a
previous plan, Visteon proposed moving most of its pension plans,
covering 21,000 current and future retirees, to the government’s
Pension Benefit Guaranty Corp. The move would have reduced pensions by
$100 million, affecting younger retirees the most. Under the new plan,
about $1.6 billion in debt would be converted into stock in the
reorganized Visteon, leaving the new company’s U.S. operations
virtually debt-free.
href='http://www.freep.com/article/20100316/BUSINESS01/100316048/1002/rs'
s02=''>Read more.

Madoff Family Challenges Trustee
Claims

Members of Bernard Madoff's family want civil complaints alleging
they were in on the disgraced financier's massive securities fraud
thrown out, the Associated Press reported yesterday. The accusation by
trustee Irving Picard 'is a sensationalistic attempt to lump
together members of the Madoff family and create liability by
association,' attorneys for brother Peter Madoff wrote in papers filed
late Monday in federal bankruptcy court in Manhattan. Picard has alleged
it would have been impossible for them not to know about a scheme that
enriched the family, and has demanded they return ill-gotten gains to
burned investors. Madoff, his brother and sons Mark and Andrew have all
insisted the three were purposely left in the dark. While the FBI says
its investigation is ongoing, none of the family members have been
charged with any crimes.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/03/16/AR'>Read
more.

Uno Chicago Grill Owner Files
Reorganization Plan

The bankrupt parent of the Uno Chicago Grill pizza chain filed a
reorganization plan on Monday proposing to transfer the company's
ownership to senior lenders, Reuters reported yesterday. Senior secured
noteholders will own 100 percent of Uno Restaurant Holdings Corp.'s new
common stock once the plan goes into effect. However, general unsecured
claims would be wiped out under the proposed plan, which aims to slash
the company's outstanding debt from about $176.3 million to about $41.0
million, court papers showed. The company had received support from
lenders for a pre-packaged reorganization plan before filing for
bankruptcy in January.
href='http://www.reuters.com/article/idUSSGE62F0GB20100316'>Read
more.

AmTrust, FDIC Face Off in Bankruptcy Court
over $2.2 Billion Claim

A legal battle is brewing between the parent company of Cleveland's
AmTrust Bank and the federal regulators who took over the failing thrift
late last year, Dow Jones Daily Bankruptcy Review reported today.
In court papers filed on Friday, AmTrust Financial Corp., the corporate
parent of AmTrust Bank, asked Bankruptcy Judge Pat E.
Morgenstern-Clarren to disallow the Federal Deposit Insurance
Corp.'s $2.2 billion claim against it. The FDIC, which has been acting
as the receiver for AmTrust Bank, has been sparring with the
family-owned bank's parent since it took over the bank just days after
the parent filed for bankruptcy protection. The FDIC says it has a $2.2
billion unsecured 'priority claim' against the parent based on its
failure to maintain minimum capital levels at the thrift. Debts owed to
a government agency typically receive priority status under bankruptcy
law. AmTrust Financial disputes the validity of the FDIC's $2.2 billion
priority claim but says the 'mere threat' of it presents a 'clear and
substantial' obstacle to its ability to file a reorganization plan.

Blockbuster Raises Chapter 11 as a
Possibilty

Video-rental chain Blockbuster Inc. said yesterday that it may need
to file for chapter 11 protection after years of struggling to lessen
its debt load, Reuters reported yesterday. Blockbuster also said
yesterday its auditors have raised doubts about its ability to operate
as a going concern -- as the company had warned investors a month ago
they would. The once-profitable video chain, which reported a fourth
quarter net loss of $434.9 million, has been trying to diversify into
new distribution channels as rentals and sales at its 6,500 stores
worldwide continue to dwindle amid challenges from the Internet, by-mail
movie-rental services like Netflix Inc. and kiosks from Coinstar Inc.'s
Redbox.
href='http://www.reuters.com/article/idUSNN1611187620100316'>Read
more.

Simon Property Group Readies New Offer
for General Growth

Mall giant Simon Property Group Inc. is readying a sweetened takeover
bid for bankrupt rival General Growth Properties Inc. that would top an
offer on the table from several General Growth investors, Dow Jones
Daily Bankruptcy Review reported today. Simon, which owns 321
U.S. retail properties, sent a letter on Monday to General Growth's
lawyers, saying that it expects to deliver its improved bid late this
week or early next. Simon didn't outline details of its offer, but it
did say that it will resolve antitrust concerns that may arise from
combining the first and second largest U.S. mall owners. Simon's offer
would need to top a recapitalization proposal unveiled earlier this
month by Canadian property investor Brookfield Asset Management Inc.,
General Growth investors Fairholme Capital Management and Pershing
Square Capital Management LP. That offer values General Growth, which
would split into two companies upon emerging from bankruptcy, at $15 per
share.

Big Banks Squeezed by Cities and
States

Fed up with the tight supply of credit, state and local governments
across the U.S. are starting to punish big banks, the Wall Street
Journal reported today. State lawmakers in Maryland, Massachusetts,
Minnesota and New Mexico have introduced legislation that would funnel
more money into small financial institutions, which generally have
avoided the brunt of criticism over the industry's reluctance to lend.
New York Mayor Michael Bloomberg wants to deposit as much as $25 million
in city tax proceeds in credit unions. The city of Lake Oswego, Ore., a
suburb of Portland with about 36,000 residents, is moving $1.2 million
from a state investment pool into six community-based banks that support
local businesses, community organizations and civic groups.
title='Read more.'
href='http://online.wsj.com/article/SB1000142405274870434930457511584281'>Read
more. (Subscription required.)

Chrysler to Await Arbitration Before
Dealer Appointments

Chrysler Group LLC said that it will no longer give dealerships
additional brands to sell in those areas where former dealers are
seeking arbitration over the auto maker's decision to close their
showrooms, Dow Jones Daily Bankruptcy Review reported today. The
automaker sells vehicles under the Jeep, Chrysler and Dodge brand lines.
Some dealers can sell all three or as few as one of the lines at their
dealerships. When a dealer closes, Chrysler traditionally moves the
lines to another dealer to round out its portfolio. Along with General
Motors Co., Chrysler was forced to offer arbitration to dealers who
wished to stay in business. About 1,100 dealers sought arbitration from
GM and Chrysler. Chrysler, which hoped to use bankruptcy as a path to
eliminate weaker unprofitable stores and go forward with fewer but
financially stronger dealers, said on Monday that it won't proceed with
its plans to consolidate the three brands until the arbitration takes
action on the case.

International

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