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October 19, 2005
id='1'>Inflation
Soars in September
Wholesale prices
jumped 1.9
percent in September according to Labor Department reports, the
sharpest monthly
surge in 15 years. The culprit was soaring energy prices, the
Washington
Post reported yesterday. Prices for energy-related goods advanced
7.1 percent,
compared with a 3.7 percent increase in August. The price of natural
gas led
the way with a startling 9 percent rise. While the overall trend was
not a surprise,
the actual rate of increase exceeded the expectations of most analysts
and reinforced
the view that the Federal Reserve is likely to continue raising
benchmark interest
rates incrementally as it has for the past year.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/10/18/AR20051…'>Read
more.
id='2'>San
Diego Council Rejects Plan to Settle Pension Suit
The San Diego City
Council
rejected a settlement proposal yesterday that could have ended a
lawsuit calling
for the city to catch up on 10 years of debt to its pension system,
the San
Diego Union-Tribune reported today. Don McGrath, an executive
assistant
city attorney, said that the council refused to accept the initial
offer to
transfer an estimated $150 million worth of land to the pension fund,
but allowed
him to begin negotiations. An attorney representing a retired employee
had asked
the council to agree to give up some of its land holdings to make up
for the
city’s failure to make its full contribution to the retirement
fund from 1996
to this year.
href='http://www.signonsandiego.com/news/metro/pension/20051019-9999-1m19pens…'>Read
more.
id='3'>Flowers
to Benefit from Refco’s Filing
Refco Inc.’s filing for the fourth-largest bankruptcy in U.S.
history
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=257096%2B1…'>may
help restructuring pro Christopher Flowers’ efforts to buy at
least some of
the company, Reuters reported yesterday. A hearing on the
bankruptcy will
be held today at 11 a.m. EDT before Judge Robert Drain.
In other news, Austrian bank
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=257299%2B1…'>BAWAG
P.S.K. said that it was considering selling loans it provided to
Refco,
Reuters reported yesterday. BAWAG, which is owned by Austria’s
trade unions,
said that it lent $418.2 million to a firm owned by Refco CEO
Phillip Bennett,
who was arrested last week and charged with securities fraud.
Meanwhile,
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=74607%2B19…'>corporate
governance experts criticized Goldman Sachs for advising Refco
after helping
it sell shares to the public, but said that the bank was right to
leave the
scene quickly after negotiating the sale of a Refco unit to an
investor group,
Reuters reported today. Goldman, which underwrote Refco’s
initial offering
in August, was criticized for agreeing to advise Refco after the
commodities
and futures broker announced that its chief executive controlled a
company
that owed Refco $430 million.
id='4'>Stock
Falls After Company Hired Bankruptcy Lawyers
Unconfirmed reports
that
power producer Calpine hired bankruptcy attorneys dropped the San
Jose-based
energy company’s stock by nearly 15 percent, the Mercury
News reported
yesterday. The New York Post reported that Calpine had hired
bankruptcy
lawyers from Kirkland & Ellis. The newspaper cited anonymous
sources who
said that hiring of the lawyers is not a definitive signal that the
Calpine
intends to file for bankruptcy. Calpine released a statement at noon
yesterday
saying that Kirkland & Ellis had been a “long-time adviser
for the company”
and that Kirkland & Ellis advises Calpine on “a variety of
issues,” including
its lawsuit with bondholders.
id='5'>Chapter
11 Filing Lists More Than $10 Million in Assets
While Weston
Nurseries officially
filed for bankruptcy last week, it had been considering the measure
since June,
according to the documents filed in U.S. Bankruptcy Court in
Worcester, Mass.,
the Metro West Daily News reported today. One part of the
filing, a statement
by attorney Alan J. Braunstein of Reimer and Braunstein LLP,
stated that
attorneys began working on the bankruptcy proceedings on June 13. The
filing
said that both the company’s assets and its liabilities were in
the $10-$50
million range. And it included a list of its top 20 creditors, to whom
the company
owes approximately $427,000.
id='6'>Kaiser
Motion, Objection Filed
Kaiser Aluminum
filed a motion
seeking a U.S. Bankruptcy Court order estimating at zero certain
contingent
and unliquidated insurance claims filed by ACE Property and Casualty
Co. and
certain other insurance companies, BankruptcyData.com reported today.
The company
also filed an objection to the motion of certain insurers for more
definite
statement under Bankruptcy Rules 3020, 7012(e) and 9014 and with
respect to
its amended reorganization plan.
id='7'>Geneva
Settlement Approved
The U.S. Bankruptcy
Court
issued an order approving Geneva Steel Holdings’ estate’s
participation in the
settlement fund established by Marsh & McLennan Co., and further
ordered
that the determination as to whether the settlement funds are
allocated in whole
or in part, to be property of the debtor or another Geneva entity
shall be reserved
to determination at a later time, BankruptcyData.com reported
today.
id='8'>Pledge-breaking
Gas Co. Enters Chapter 11
The Texas natural
gas company
that was sued by Illinois for reneging on a fixed-price offer has
filed for
bankruptcy, the Chicago Sun-Times reported today. Santanna
Energy Services
said that it sought chapter 11 protection to buy time to address the
challenge
of skyrocketing natural gas costs. Santanna markets gas to about
35,000 residential
and business customers through gas utilities in northern Illinois. In
promotional
materials this summer, Santanna promised customers that its fixed
price for
natural gas wouldn’t be more than 79.9 cents per therm "no
matter what."
This month, the company told 15,000 customers that it couldn’t
stick with fixed
prices because of the energy crisis caused by the hurricanes.
Santanna’s October
rate is now $1.28 per therm, above Peoples Energy’s October
price of nearly
$1.13 per therm. The Illinois attorney general’s office sued
Santanna for allegedly
misrepresenting to customers its fixed-rate offer for natural gas. The
Illinois
Commerce Commission staff has also recommended that the state
regulatory body
investigate Santanna.
href='http://www.suntimes.com/output/business/cst-fin-santanna19.html'>Read
the full story.
id='9'>Ovation
Files for Chapter 11
After months of
fending off
low prices from big-box electronics retailers, Ovation is seeking
relief, the
Indiana Star reported today. The Indianapolis-based audio/video
chain
filed for chapter 11 last week, hoping to regroup and emerge with a
stronger
custom installation business and generally leaner operations. The
company, founded
by McCormick in 1986, has 161 employees in Indiana, Kentucky and Ohio.
href='http://www.indystar.com/apps/pbcs.dll/article?AID=/20051019/BUSINESS/51…'>Read
the full story.
id='10'>Delta
to Add 11 Transatlantic Routes
Delta Air Lines
Inc. said
yesterday that it would add 11 new routes between the United States
and Europe
and the Middle East in 2006 in a bid to become the world’s
largest transatlantic
airline, despite its financial troubles, Reuters reported yesterday.
The transition
will be carried out by transferring existing wide-bodied aircraft from
struggling
domestic markets where flight frequencies will be cut, Delta officials
said
at a Paris news briefing. The airline will likely ask its pilots union
to extend
an agreement to recall retired pilots to prevent staffing shortages.
href='http://www.nytimes.com/reuters/business/business-airlines-delta.html'>Read
more.
id='11'>U.S.
Bank Profits Feel Pinch from Strapped Consumers
This year’s
surge in consumer
bankruptcy filings is taking a predictable bite out of bank profits,
Reuters
reported yesterday. But will the spike in charge-offs at Citigroup
Inc., Wells
Fargo & Co. and others be the temporary blip many investors
assume? Or could
it be a longer-term trend that will weigh on banks and credit-card
issuers’
earnings into 2006 and beyond? The big uncertainty isn’t the new
bankruptcy
law itself, which is widely expected to reduce the number of consumers
who successfully
discharge their debts to credit-card issuers and other creditors.
Instead, the
question centers on unrelated new rules that require card issuers to
be more
honest about the cost of credit and to ensure that the minimum
payments consumers
make each month cover not only finance charges and penalty fees, but
some principal
as well.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=263155%2B1…'>Read
more.